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Business group prevalence and impact across countries and over time : What can we learn from the literature?

Author

Listed:
  • Michael Carney

    (Concordia University [Montreal])

  • Marc van Essen

    (HSG - University of St.Gallen)

  • Saul Estrin

    (LSE - London School of Economics and Political Science)

  • Daniel Shapiro

    (SFU Beedie [SFU.ca] - Beedie School of Business [Simon Fraser University] - SFU.ca - Simon Fraser University = Université Simon Fraser)

Abstract

Purpose The purpose of this paper is to examine two prominent perspectives on business group functioning, institutional void (IV) and entrenchment/exploitation (EE), that make different predictions about the effect of business group (BG) on the economy. The authors examine the effects of BG prevalence in an economy and its effect on macroeconomic outcomes including foreign direct inward and outward investment, innovation and development of the financial sector. Design/methodology/approach The authors build a unique database by extracting estimates of BG prevalence for multiple countries between 1978 and 2012 from the existing literature and use this to test conflicting predictions derived from the IV and EE perspectives, respectively. Findings The authors find no consistent evidence that BG prevalence diminishes over time with economic development as IVs diminish, which is predicted by the IV perspective. Instead, the long-term persistence of BGs in many countries appears to be more consistent with the EE perspective. However, this study also finds no support for the perspective that high levels of BG prevalence are negatively associated with country-level indicators and determinants of economic development and competitiveness, as suggested by that perspective. Originality/value The authors conclude that there is no robust support for either the IV or the EE perspective and highlight the need for more contextualized theorizing about the evolution of BGs.

Suggested Citation

  • Michael Carney & Marc van Essen & Saul Estrin & Daniel Shapiro, 2017. "Business group prevalence and impact across countries and over time : What can we learn from the literature?," Post-Print hal-02312101, HAL.
    • Handle: RePEc:hal:journl:hal-02312101
    DOI: 10.1108/MBR-10-2016-0037
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    Citations

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    Cited by:

    1. Yadong Luo & Huan Zhang & Juan Bu, 2019. "Developed country MNEs investing in developing economies: Progress and prospect," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 633-667, June.
    2. Carney, Michael & Shapiro, Daniel & Estrin, Saul & Liang, Zhixiang, 2018. "National institutional systems, foreign ownership and firm performance: the case of understudied countries," LSE Research Online Documents on Economics 87042, London School of Economics and Political Science, LSE Library.
    3. Aguilera, Ruth V. & Crespí-Cladera, Rafel & Infantes, Paula M. & Pascual-Fuster, Bartolomé, 2020. "Business groups and internationalization: Effective identification and future agenda," Journal of World Business, Elsevier, vol. 55(4).
    4. Henri Luomarant & Fernando Cantu & Steve MacFeely & Anu Peltola, . "The role of multinational and trading enterprises in employment and the gender pay gap: evidence from Finland," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    5. Wu, Lichao & Wei, Yingqi & Wang, Chengang, 2021. "Disentangling the effects of business groups in the innovation-export relationship," Research Policy, Elsevier, vol. 50(1).
    6. Wen, Riguang & Wang, Siyi & Ouyang, Yingting, 2024. "Does the pricing of intra-group investment deviate from the market rule? Evidence from domestic merger and acquisition transactions under common control in China," International Review of Financial Analysis, Elsevier, vol. 91(C).
    7. Luomaranta, Henri & Cantu, Fernando & MacFeely, Steve & Peltola, Anu, 2020. "The role of multinational and trading enterprises in the gender pay gap: Evidence from Finland," Conference papers 333136, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    8. Anaïs HAMELIN & Vivien LEFEBVRE & Laurent WEILL, 2020. "In Business Groups We Trust," Working Papers of LaRGE Research Center 2020-06, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    9. Shi, Xinwei & Sutherland, Dylan & Williams, Christopher & Rong, Ke, 2021. "Chinese MNE acquisition of unrelated foreign businesses: The role of diversified business group affiliation, private ownership and strategic asset seeking," Journal of Business Research, Elsevier, vol. 129(C), pages 145-156.
    10. Khatua, Apalak, 2023. "Why is diversification not dead? Evidence from family business groups during economic reforms in India," Journal of Family Business Strategy, Elsevier, vol. 14(2).

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