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The Multi-Entity Structure and Control in Business Groups

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  • Mazumdar, Surajit

Abstract

The literature on business groups in ‘emerging’ markets emphasizes several dimensions along which the group form may differ from its presumed opposite – the stand-alone firm. However, what does not usually capture too much attention is that the business group structure in India can and does incorporate several companies/firms which are neither publicly listed nor even individually large. So much so that several apparently stand-alone companies can also be parts of networks connecting them to other such companies/firms. The interconnections which link these several entities are, however, crucial inter alia to the exercise of control by business families over capital and wealth far in excess of what is legally owned by them. Concentrated control over assets as well as concentrated ‘ownership’ of companies are the related outcomes of these – and this provides an important reason for the resilience of the multi-entity group structure. The specific structure of the network of individual business groups and their participating entities, however, change over time in response to changing institutional contexts as well as due to its endogenous dynamics. This paper will seek to develop these propositions using the specific case of the Reliance group as an illustration and further argue that liberalization, instead of developing a “market for corporate control”, has only served to reinforce this method of “entrenchment”.

Suggested Citation

  • Mazumdar, Surajit, 2018. "The Multi-Entity Structure and Control in Business Groups," MPRA Paper 93241, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:93241
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    References listed on IDEAS

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    1. Mazumdar, Surajit, 2016. "From “Outsider” to Insider: The Case of Reliance," MPRA Paper 93162, University Library of Munich, Germany.
    2. Leff, Nathaniel H, 1978. "Industrial Organization and Entrepreneurship in the Developing Countries: The Economic Groups," Economic Development and Cultural Change, University of Chicago Press, vol. 26(4), pages 661-675, July.
    3. Granovetter, Mark, 1995. "Coase Revisited: Business Groups in the Modern Economy," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 4(1), pages 93-130.
    4. Tarun Khanna & Krishna Palepu, 2005. "The Evolution of Concentrated Ownership in India: Broad Patterns and a History of the Indian Software Industry," NBER Chapters, in: A History of Corporate Governance around the World: Family Business Groups to Professional Managers, pages 283-324, National Bureau of Economic Research, Inc.
    5. Mazumdar, Surajit, 2011. "The State, Industrialization and Competition: A reassessment of India's Leading Business Enterprises under Dirigisme," MPRA Paper 47810, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    India; Business Groups; Corporate Control;
    All these keywords.

    JEL classification:

    • K2 - Law and Economics - - Regulation and Business Law
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • N8 - Economic History - - Micro-Business History
    • N85 - Economic History - - Micro-Business History - - - Asia including Middle East

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