As emerging economies have improved their economic institutions, the performance of many large business groups has been reduced because such groups acted as market-substitute mechanisms. Consequently, business groups have become increasingly involved in refocusing activities. The authors develop a framework in which such refocusing is explained as an attempt to balance overall transaction costs faced by groups with organization-specific costs in order to improve group performance. They examine external and internal factors that might lead to the initiation of refocusing and also explain why different ownership structures may affect the direction of that refocusing (e.g., related vs. unrelated diversification).
Amsden, A.1989. Asia’s next giant: South Korea and late industrialization. New York: Oxford University Press.
2.
Andrews, W. A., & Dowling, M. J.1998. Explaining performance changes in newly privatized firms. Journal of Management Studies, 35: 601-617.
3.
Aoki, M.1988. Information, incentives, and bargaining in the Japanese economy. Cambridge, UK: Cambridge University Press.
4.
Aoki, M.1990. Toward an economic model of the Japanese firm. Journal of Economic Literature, 28: 1-27.
5.
Berger, P. G., & Ofek, E.1999. Causes and effects of corporate refocusing programs, Review of Financial Studies, 12: 311-345.
6.
Bergstrom, C., & Rydqvist, K.1990. Ownership of equity in dual-class firms. Journal of Banking and Finance, 14: 255-269.
7.
Bertrand, M., Mehta, P., & Mullainathan, S.2002. Ferreting out tunneling: An application to Indian business groups. Quarterly Journal of Economics, 117: 121-148.
8.
Blanchard, O., & Shleifer, A.2001. Federalism with and without political centralization: China versus Russia. IMF Staff Papers, 48: 171-180.
9.
Boisot, M., & Child, J.1996. From fiefs to clans and network capitalism: Explaining China’s emerging economic order. Administrative Science Quarterly, 41: 600-628.
10.
Brickley, J. A., Lease, R. C., & Smith, C. W.1988. Ownership structure and voting on antitakeover amendments. Journal of Financial Economics, 20: 267-291.
11.
Bromiley, P., & Cummings, L. L.1995. Transactions costs in organizations with trust. Research on Negotiations in Organizations, 5: 219-247.
12.
Bruton, G. D., Ahlstrom, D., & Wan, J. C. C.2001. Turnaround success of large and midsize Chinese owned firms: Evidence from Hong Kong and Thailand. Journal of World Business, 36(2): 146-165.
13.
Carney, M.2004. The institutions of industrial restructuring in Southeast Asia. Asia Pacific Journal of Management, 21: 171-188.
14.
Carrera, A., Mesquita, L., Perkins, G., & Vassolo, R.2003. Business groups and their corporate strategies on the Argentine roller coaster of competitive and anticompetitive shock. Academy of Management Executive, 17(3): 32-44.
15.
Caves, R., & Uekusa, M.1976. Industrial organization in Japan. Washington, DC: Brookings Institution.
16.
Chang, S. J.2003. Ownership structure, expropriation, and performance of group-affiliated companies in Korea. Academy of Management Journal, 46: 238-253.
17.
Chang, S. J., & Choi, U.1988. Strategy, structure and performance of Korean business groups: A transactions cost approach. Journal of Industrial Economics, 37: 141-158.
18.
Chang, S. J., & Hong, J.2000. Economic performance of group-affiliated companies in Korea: Intragroup resource sharing and internal business transactions. Academy of Management Journal, 43: 429-448.
19.
Chu, W.2001. Contingency organizations and shared values: Multiple logics in managing diversification. Asia Pacific Journal of Management, 18: 83-99.
20.
Chung, C.-N.2001. Markets, culture and institutions: The emergence of large business groups in Taiwan, 1950s-1970s. Journal of Management Studies, 38: 719-745.
21.
Claessens, S., Djankov, S., Fan, J. P. H., & Lang, L. H. P.2002. Disentanglingthe incentive and entrenchment effects of large shareholdings. Journal of Finance, 57: 2741-2771.
22.
Clague, C.1997. Introduction. In C. Clague (Ed.), Institutions and economic development: Growth and governance in less-developed and post-socialist countries:1-9. Baltimore, MD: Johns Hopkins University Press.
23.
Collin, S.-O.1998. Why are these islands of power found in the consciousness of oceans of ownership: Institutional and governance hypotheses explaining the existence of business groups in Sweden. Journal of Management Studies, 35: 719-746.
24.
David, P., Hitt, M. A., & Gimeno, J.2001. The influence of activism by institutional investors on R&D. Academy of Management Journal, 44: 144-157.
25.
David, P., Kochhar, R., & Levitas, E.1998. The effect of institutional investors on the level and mix of CEO compensation. Academy of Management Journal, 41: 200-208.
26.
Devlin, R. A., Grafton, R. Q., & Rowlands, D.1998. Rights and wrongs: A property rights perspective on Russia’s market reforms. Antitrust Bulletin, 43: 275-296.
27.
Dharwadkar, R., George, G., & Brandes, P.2000. Privatization in emerging economies: An agency theory perspective. Academy of Management Review, 25: 650-669.
28.
Djankov, S., Glaeser, E., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A.2003. The new comparative economics. Journal of Comparative Economics, 31: 595-619.
29.
Djankov, S., & Murrell, P.2002. Enterprise restructuring in transition: A quantitative survey. Journal of Economic Literature, 40: 739-792.
30.
Evans, P.1979. Dependent development: The alliance of multinational, state, and local capital in Brazil. Princeton, NJ: Princeton University Press.
31.
Fields, K. J.1995. Enterprise and the state in Korea and Taiwan. Ithaca, NY: Cornell University Press.
32.
Filatotchev, I., Buck, T., & Zhukov, V.2000. Downsizing in privatized firms in Russia, Ukraine, and Belarus. Academy of Management Journal, 43: 286-304.
33.
Filatotchev, I., Wright, M., Uhlenbruck, K., Tihanyi, L., & Hoskisson, R. E., 2003. Governance, organizational capabilities, and restructuring in transition economies. Journal of World Business, 38: 331-347.
34.
Fisher, G., Lee, J., & Johns, L.2004. An exploratory study of company turnaround in Australia and Singapore following the Asia crisis. Asia Pacific Journal of Management, 21: 149-170.
35.
Fukuyama, F.1995. Trust: The social virtues and the creation of prosperity. New York: Free Press.
36.
George, G., & Prabhu, G. N.2000. Developmental financial institutions as catalysts of entrepreneurship in emerging economies. Academy of Management Review, 25: 620-629.
37.
Gerlach, M. L.1997. The organizational logic of business groups: Evidence from the zaibatsu. In T. Shiba & M. Shimotani (Eds.). Beyond the firm: business groups in international and historical perspectives:245-273. New York: Oxford University Press.
38.
Ghemawat, P., & Khanna, T.1998. The nature of diversified business groups: A research design and two case studies. Journal of Industrial Economics, 46: 35-61.
39.
Gillan, S. L., & Starks, L. T.2003. Corporate governance, corporate ownership, and the role of institutional investors: A global perspective. Journal of Applied Finance, 13(2): 4-22.
40.
Granovetter, M.1994. Business groups. In N. J. Smelser & R. Swedberg (Eds.), The handbook of economic sociology:453-475. Princeton, NJ: Princeton University Press.
41.
Guillén, M. F.2000. Business groups in emerging economies: A resource-based view. Academy of Management Journal, 43: 362-380.
42.
Haggard, S.2001. Politics, institutions and globalization: The aftermath of the Asian financial crisis. American Asian Review, 192: 71-98.
43.
Hargis, K.1998. Do foreign investors stimulate or inhibit stock market development in Latin America?Quarterly Review of Economics and Finance, 38: 303-319.
44.
Hill, C. W. L., Hitt, M. A., & Hoskisson, R. E.1992. Cooperative versus competitive structures in related and unrelated diversified firms. Organization Science, 3: 501-521.
45.
Hill, C. W. L., & Hoskisson, R. E.1987. Strategy and structure in the multiproduct firm. Academy of Management Review, 12: 331-341.
46.
Hitt, M. A., Ahlstrom, D., Dacin, M. T., Levitas, E., & Svobodina, L.2004. The institutional effects on strategic alliance partner selection: China versus Russia. Organization Science, 15: 173-185.
47.
Hoshi, T., Kashyap, A., & Scharfstein, D.1990. The role of banks in reducing the costs of financial distress in Japan. Journal of Financial Economics, 27: 67-88.
48.
Hoskisson, R. E., Cannella, A. A., Tihanyi, L., & Faraci, R.2004. Asset restructuring and business group affiliation in French civil law countries. Strategic Management Journal, 25: 525-539.
49.
Hoskisson, R. E., Eden, L., Lau, C. M., & Wright, M.2000. Strategy in emerging economies. Academy of Management Journal, 43: 249-267.
50.
Hoskisson, R. E., Hill, C. W. L., & Kim, H.1993. The multidivisional structure: Organizational fossil or source of value?Journal of Management, 19: 269-298.
51.
Hoskisson, R. E., & Hitt, M. A.1994. Downscoping: How to tame the diversified firm. New York: Oxford University Press.
52.
Hoskisson, R. E., Hitt, M. A., Johnson, R. A., & Grossman, W.2002. Conflicting voices: The effects of institutional ownership heterogeneity and internal governance on corporate innovation strategies. Academy of Management Journal, 45: 697-716.
53.
Hoskisson, R. E., & Johnson, R. A.1992. Corporate refocusing and strategic change: The effect on diversification strategy and R&D intensity. Strategic Management Journal, 13: 625-634.
54.
Hoskisson, R. E., Johnson, R. A., & Moesel, D. D.1994. Corporate divestiture intensity in restructuring firms: Effects of governance, strategy, and performance. Academy of Management Journal, 37: 1207-1251.
55.
Hoskisson, R. E., Johnson, R. A., Yiu, D., & Wan, B.2001. Restructuring strategies of diversified business groups: Differences associated with country institutional environments. In M. Hitt, E. Freeman, & J. Harrison (Eds.), The Blackwell handbook of strategy:433-463. Oxford, UK: Basil Blackwell.
56.
Hoskisson, R. E., & Turk, T.1990. Corporate restructuring: Governance and control limits of the internal market. Academy of Management Review, 15: 459-477.
57.
Hoskisson, R. E., Yiu, D., Bruton, G. D., & White, R. E.2004. Employment versus market innovation outcomes in Chinese firms: A political view of business groups. Working paper, Arizona State University.
58.
Johnson, R. A.1996. Antecedents and outcomes of corporate refocusing. Journal of Management, 22: 439-483.
59.
Jones, G. R., & Hill, C. W. L.1988. Transaction cost analysis of strategy-structure choice. Strategic Management Journal, 9: 159-172.
60.
Keefer, P., & Knack, S.1997. Why don’t poor countries catch up? A cross-national test of an institutional explanation. Economic Journal, 35: 590-602.
61.
Keister, L. A.1998. Engineering growth: Business group structure and firm performance in China’s transition economy. American Journal of Sociology, 104: 404-440.
62.
Kennedy, J. C.2002. YTL Corporation’s CEO Tan Sri Dato’Francis Yeoh on providing world-class products at third-world prices. Academy of Management Executive, 16(3): 27-30.
63.
Khanna, T., & Palepu, K.1997. Why focused strategies may be wrong for emerging markets. Harvard Business Review, 75: 3-10.
64.
Khanna, T., & Palepu, K.1999. Policy shocks, market intermediaries, and corporate strategy: The evolution of business groups in Chile and India. Journal of Economics and Management Strategy, 8: 271-310.
65.
Khanna, T., & Palepu, K.2000. The future of business groups in emerging markets: Long-run evidence from Chile. Academy of Management Journal, 43: 268-285.
66.
Khanna, T., & Rivkin, J.2001. Estimating the performance effects of business groups in emerging markets. Strategic Management Journal, 22: 45-74.
67.
Kim, H., Hoskisson, R. E., Tihanyi, L., & Hong, J.2004. Evolution and restructuring of diversified business groups in emerging markets: The lessons from chaebols in Korea. Asia Pacific Journal of Management, 21: 25-48.
68.
Kornai, J., Maskin, E., & Roland, G.2003. Understanding the soft budget constraint. Journal of Economic Literature, 41: 1095-1136.
69.
Kripalani, M.2004. Ratan Tata: No one’s doubting now. Business Week, July 26: 50-51.
70.
La Porta, R., Lopez-de-Silanes, F., & Shleifer, A.1999. Corporate ownership around the world. Journal of Finance, 54: 471-517.
71.
Leff, N. H.1976. Capital markets in the less developed countries: The group principal. In R. McKinnon (Ed.), Money and finance in economic growth and development:97-122. New York: Dekker.
72.
Leff, N. H.1978. Industrial organization and entrepreneurship in the developing countries: The economic groups. Economic Development and Cultural Change, 78: 661-674.
73.
London, T., & Hart, S. L.2004. Reinventing strategies for emerging markets: Beyond the transnational model, Journal of International Business Studies, 35: 350-370.
74.
Markides, C. C.1996. Diversification, refocusing and economic performance. Cambridge, MA: MIT Press.
75.
Markides, C. C., & Williamson, P. J.1996. Corporate diversification and organization structure: A resource-based view. Academy of Management Journal, 39: 340-347.
76.
Megginson, W. L., & Netter, J. M.2001. From state to market: A survey of empirical studies on privatization. Journal of Economic Literature, 39: 321-389.
77.
Nee, V.1992. Organizational dynamics of market transition: Hybrid firms, property rights and mixed economy in China. Administrative Science Quarterly, 31: 1-27.
78.
North, D. C.1990. Institutions, institutional change and economic performance. Cambridge, MA: Harvard University Press.
79.
Palmer, D., Friedland, R., Jennings, P. D., & Powers, M. E.1987. The economics and politics of structure: The multidivisional form and the large U.S. corporation. Administrative Science Quarterly, 32: 25-48.
80.
Peng, M. W.2003. Institutionaltransitions and strategic choices. Academyof Management Review, 28(2):275-296.
81.
Polsiri, P., & Wiwattanakantang, Y.2004. Business groups in Thailand: Before and after the East Asian financial crisis. Working paper, Center for Economic Institutions, 2004-2013.
82.
Ramamurti, R.2000. A multilevel model of privatization in emerging economies. Academy of Management Review, 25: 525-550.
83.
Ramaswamy, K., Li, M., & Petitt, B. S. P.2004. Who drives unrelated diversification? A study of Indian manufacturing firms. Asia Pacific Journal of Management, 18: 403-423.
84.
Ramaswamy, K., Li, M., & Veliyath, R.2002. Variations in ownership behavior and propensity to diversify: A study of the Indian corporate context. Strategic Management Journal, 23: 345-358.
85.
Reed, S., & Arndt, M.2004. The raja of steel. Business Week, December 20: 50-52.
86.
Ring, P. S., & Van de Ven, A.1992. Structuring cooperative relationships between organizations. Strategic Management Journal, 13: 483-498.
87.
Sougata, R.2003. Strategic adaptation of firms during economic liberalisation: Emerging issues and a research agenda. International Journal of Management, 20: 271-281.
88.
Strachan, H.1976. Family and other business groups in economic development: The case of Nicaragua. New York: Praeger.
89.
State Statistical Bureau, Peoples Republic of China. 2000. 2000 China Statistical Yearbook. Beijing: China Statistical Publishing House.
90.
Tan, H., & See, H.2004. Strategic reorientation and response to the Asian financial crisis: The case of the manufacturing industry in Singapore. Asia Pacific Journal of Management, 21: 189-211.
91.
Tan, J., Luo, Y., & Zhang, Y.1998. Competitive strategies under regulatory environments: A study of Chinese private entrepreneurs. International Journal of Management, 15: 141-150.
92.
Thomsen, S., & Pedersen, T.2000. Ownership structure and economic performance in the largest European companies. Strategic Management Journal, 21: 689-705.
93.
Unite, A. A., & Sullivan, M. J.2003. The effect of foreign entry and ownership structure on the Philippine domestic banking market. Journal of Financial Economics, 27: 2323-2346.
94.
Uzzi, B.1997. Social structure and competition in intra-firm networks: The paradox of embeddedness. Administrative Science Quarterly, 42: 35-67.
95.
Wan, W. P.2005. Country resource environments, firm capabilities, and corporate diversification strategies. Journal of Management Studies, 42: 161-182.
96.
Wan, W. P., & Hoskisson, R.2003. Home country environments, corporate diversification strategies, and firm performance. Academy of Management Journal, 46: 27-45.
97.
Williamson, O. E.1975. Markets and hierarchies: Analysis and antitrust implications. New York: Free Press.
98.
World Bank. 2004. Global economic prospects 2004—Realizing the development promise of the Doha Agenda.
99.
Wright, M., Filatotchev, I., Hoskisson, R. E., & Peng, M. W.2005. Strategy research in emerging economies: Challenging the conventional wisdom. Journal of Management Studies, 42: 1-30.
100.
Xin, K. R., & Pearce, J. L.1996. Guanxi: Connections as substitutes for formal institutional support. Academy of Management Journal, 39: 1641-1658.
101.
Yiu, D., Bruton, G. D., & Lu, Y.2005. Understanding business group performance in an emerging economy: Acquiring resources and capabilities in order to prosper. Journal of Management Studies, 42: 183-206.
