Finance and Governance in Developing Economies
National Bureau of Economic Research (NBER); University of Alberta - Department of Finance and Statistical Analysis
February 28, 2011
Classic Big Push industrialization envisions state planners coordinating economic activity to internalize a range of externalities that otherwise lock in a low-income equilibrium, but runs afoul of well-known government failure problems. Successful Big Push coordination may occur instead when a large business group, acting in its controlling shareholder’s self-interest, coordinates the establishment and expansion of businesses in diverse sectors. Where business groups play this role, many basic axioms of Anglo-American corporate governance, including the advocacy of shareholder value maximization and contestable corporate control, must be qualified.
Number of Pages in PDF File: 33
Keywords: Big Push, business groups, family firms, Network externalities, rent seeking, public choice
JEL Classification: G3, O1, O25, P11
Date posted: March 3, 2011