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Asia Pacific Journal of Management

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01.12.2012

Diversification, resource concentration, and business group performance: Evidence from Taiwan

verfasst von: Chien-Nan Chen, Wenyi Chu

Erschienen in: Asia Pacific Journal of Management | Ausgabe 4/2012

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Abstract

This study examines the impact of resource configuration, specifically diversification and resource concentration, on the performance of business groups in an emerging economy. Diversification indicates the product/market portfolio of a business group, while resource concentration illustrates the degree of resource dispersion among different affiliates within a business group. Based on the data collected from 125 Taiwanese business groups from 2004 to 2007, this study finds that resource concentration positively influences the performance of business groups, while diversification has a negative impact on the performance of business groups. The findings of this study provide support to the resource-based view and the market power perspective of business groups. This study also finds that the appropriate organizational form may change over time, confirming the institution-based view of business groups in emerging economies.

Vorheriger Artikel Developing business trust in government through resource exchange in China

Nächster Artikel Explaining factors affecting individual innovation: The case of producer group members in Thailand

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Generally speaking, a multibusiness firm is a legally independent firm with various business units regardless of its origin, whether the unit is as a result of internal development or acquisitions; all of the business units are the same company in law, coordinated by central ownership, and formal authority. In contrast, a business group comprises a set of companies that, though legally independent, are bound together by a constellation of formal and informal ties and are accustomed to taking coordinated actions (Chung, 2001; Granovetter, 1994; Guillén, 2000). Each affiliated company is a distinct legal entity that publishes its own financial statements, has its own board of directors, and is responsible to its own shareholders.

We would like to thank an anonymous reviewer for this suggestion.

We would like to thank an anonymous reviewer for suggesting the references.

The horizontal mode means that a business group sets up a new affiliated company to take full advantage of slack resources within the group. The vertical mode refers to the establishment of a new affiliated company in the upstream or downstream of the value chain as the size of the business group expands. The hybrid mode is a blend of the others rather than the horizontal or vertical mode alone.

Because of serious omissions of business groups-affiliates’ information, we cannot measure the independent variables effectively and thus don’t include the sample prior to 2004.

To confirm whether our findings are subject to different industry categories, we also estimated the regression equations by segmenting the full sample into two categories: the information/electronics industry, and the manufacturing/services industry. Overall, the results of the subsample regressions are similar to those of the pooled sample, confirming the robustness of our research findings.

We would like to thank two anonymous reviewers for suggesting the additional analysis.

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Titel: Diversification, resource concentration, and business group performance: Evidence from Taiwan
verfasst von: Chien-Nan Chen
Wenyi Chu
Publikationsdatum: 01.12.2012
Verlag: Springer US
Erschienen in: Asia Pacific Journal of Management / Ausgabe 4/2012
Print ISSN: 0217-4561
Elektronische ISSN: 1572-9958
DOI: https://doi.org/10.1007/s10490-010-9245-1

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