Abstract
Business groups played an important role in the economic development of East Asian countries. Yet business groups in East Asia face an uncertain future. Following the Asian Crisis, foreign creditors and investors have demanded that business groups have more transparent operations and stronger corporate governance. At the same time, as governments in East Asia have loosened trade barriers, business groups have become subject to intense competition in domestic markets. This paper argues that business groups can survive or even prosper by taking initiatives in corporate restructuring. This paper also highlights some areas for further research on business groups in this region.
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Notes
See Granovetter (1995) for a review. Ghemawat and Khanna (1998) provide a table that summarizes the evidence that business groups are prevalent in developing countries. See McVey (1992) and Orru et al. (1997) for examples of business groups in Southeast Asia, Strachan (1976) for Nicaragua, and Ghemawat and Khanna (1998) and Kedia et al. (2006) for India, Chang (2003a) for Korea, and Khanna and Wu (1998) for Chile. Business groups emerged in former socialist countries during the privatization process. During the rapid privatization in Czechoslovakia, various forms of cross ownership among banks and investment trust funds were formed, and many of those investment trust companies turned themselves into holding companies (Coffee, 1999). Similarly, Stark (1996) showed how previously state-owned firms in Hungary purchased small firms and formed groups.
See World Bank (2000).
This section is largely drawn from Chang (2006).
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This paper is based on the author’s keynote speech at the APJM Conference on the Business Groups in East Asia in Singapore, December 2005. I thank editors Andrew Delios and Mike Peng for their encouragement and conference participants for their discussion.
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Chang, SJ. Business groups in East Asia: Post-crisis restructuring and new growth. Asia Pacific J Manage 23, 407–417 (2006). https://doi.org/10.1007/s10490-006-9013-4
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DOI: https://doi.org/10.1007/s10490-006-9013-4