Business groups in emerging economies:: A resource-based view

Business groups in emerging economies result when entrepreneurs and firms accumulate the capability for repeated industry entry. Such a capability, however, can be maintained as a valuable, rare, and inimitable skill only as long as asymmetric foreign trade and investment conditions prevail. Cross-sectional and longitudinal data on a variety of emerging economies were used to test this hypothesis and three other competing explanations. The importance of business groups grew with foreign trade and investment asymmetries. The managerial problems and opportunities surrounding the rise and decline of business groups are discussed, especially in the context of the current turmoil in emerging economies.