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Managing Multi-Business Firms: A Comparison between Korean Chaebols and Diversified US Firms

Journal of World Business (2012), doi.org/10.1016/j.jwb.2012.09.001

43 Pages Posted: 12 Oct 2012  

Ji-Hwan Lee

KAIST Business School

Ajai Gaur

Rutgers Business School - Newark and New Brunswick

Date Written: 2012

Abstract

We identify and examine the efficacy of organizational mechanisms through which diversified firms are effectively managed without loss of control. Building on the resource based view of business groups, we argue that business groups in emerging markets use these mechanisms more often and derive more benefits from the use of these mechanisms than the diversified US firms. Empirical results based on samples from Korea and the US show that structural mechanisms such as strategic control and contingency arrangements do not affect divisional performance, whereas socio-cultural mechanisms such as shared values and corporate-level training have significant effect on divisional performance. We also find that Korean chaebols have leveraged socio-cultural mechanisms better than large US firms, and thus, have an advantage in continuing to diversify.

Keywords: multi-business firm, business group, Chaebol, diversification, organizational mechanism

Suggested Citation

Lee, Ji-Hwan and Gaur, Ajai, Managing Multi-Business Firms: A Comparison between Korean Chaebols and Diversified US Firms (2012). Journal of World Business (2012), doi.org/10.1016/j.jwb.2012.09.001. Available at SSRN: https://ssrn.com/abstract=2160424

Ji-Hwan Lee

KAIST Business School ( email )

85 Hoegi-ro
Dongmoon-gu
Seoul, 130-722
Korea

Ajai S. Gaur (Contact Author)

Rutgers Business School - Newark and New Brunswick ( email )

Newark, NJ
United States

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