Estimating the performance effects of business groups in emerging markets

The Evolution and Restructuring of Diversified Business Groups in Emerging Markets: The Lessons from Chaebols in Korea

“…While there are benefits of trimming down excessive components in diversified business portfolios and improving financial structure, unrelated diversification per se may not be value destroying. Research demonstrates that diversified business groups in various economies make a positive impact on performance of affiliated firms Palepu, 2000a, 2000b;Khanna and Rivkin, 2001;Wan and Hoskisson, 2003). There is also empirical evidence of positive effects of group affiliation in Korea (Chang and Choi, 1988;Chang and Hong, 2000;Zeile, 1996).…”

Business groups and profit redistribution: A boon or bane for firms?

“…2 Business groups are characterized by diverse features. Khanna (2000) and Khanna and Rivkin (2001) provide a detailed exposition of these features prevalent in different countries. Strachan (1976) points out that although some features like family ties, geographical ties and interlocking directorates tend to be common among business groups, the key characteristics that distinguish a full fledged business group from other types of organizations are diversity of affiliated firms, coalition of individuals and families, and binding relationship.…”

“…Chang and Hong (2000) find that Chaebol-affiliated firms in Korea show higher performance than unaffiliated firms. Khanna and Rivkin (2001) in a cross-country study of fourteen emerging markets find that in some economies group affiliation is positively associated with performance while for others the effect is either negative or insignificant. Lins and Servaes (2002), on the other hand, in a cross-country study of seven emerging economies, document lower performance for firms associated with industrial groups.…”

Technology transfer within China and the role of location choices

“…Business groups can overcome institutional voids and market failures by relying on the group's internal capital market and talent pool, by building intangible assets such as strong group reputation and brand names, and by accumulating expertise and knowledge from different affiliates operating in various locations (Belenzon and Berkovitz, 2010;Chang and Hong, 2000;Gopalan et al, 2007;Jian and Wong, 2010;Keister, 1998Keister, , 2001Khanna and Palepu, 2000;Khanna and Rivkin, 2001;Mahmood and Mitchell, 2004). The literature points to the performance advantages that emerging market business groups enjoy compared with other firms (e.g., Mahmood et al, 2011;Manikandan and Ramachandran, 2014).…”