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
Date Written: 2012
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
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