The Scope of Business Groups: A Penrosian Analysis

Posted: 6 Apr 2009

See all articles by Danchi Tan

Danchi Tan

National Chengchi University (NCCU) - Department of International Trade

Klaus E. Meyer

China Europe International Business School (CEIBS); Copenhagen Business School - Center for East European Studies (CEES)

Abstract

Organizations face trade-offs when designing growth strategies. With limited resources, managers have to decide in which type of business they want to deploy their resources. We integrate the Penrosian theory of the growth of the firm with institutional perspectives to analyze when business groups expand in different product areas, and when they expand abroad.

The empirical results support our propositions concerning the resource to growth relationships. Business groups with institutionally embedded resources, such as managerial ties to government, tend to pursue domestic product diversification. On the other hand, business groups with non-location bound resources have higher degrees of internationalization.

Keywords: business groups, internationalization, product diversification, scope, Penrosian Theory, growth of the firm, managerial resources, Taiwan

JEL Classification: F23, L10, M21

Suggested Citation

Tan, Danchi and Meyer, Klaus E., The Scope of Business Groups: A Penrosian Analysis. Available at SSRN: https://ssrn.com/abstract=1013389 or http://dx.doi.org/10.2139/ssrn.1013389

Danchi Tan

National Chengchi University (NCCU) - Department of International Trade ( email )

64 Chih-nan Road, Sec. 2
Taipei 11623, Wenshan
Taiwan

Klaus E. Meyer (Contact Author)

China Europe International Business School (CEIBS) ( email )

Shanghai-Hongfeng Road
Shanghai 201206
Shanghai 201206
China

HOME PAGE: http://www.ceibs.edu/faculty/facultylist/09/100132.shtml

Copenhagen Business School - Center for East European Studies (CEES) ( email )

Porcelanshaven 24
2000 Frederiksberg
Denmark

HOME PAGE: http://www.klausmeyer.co.uk

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