Ties that Bind Business Groups: Evidence from an Emerging Market

57 Pages Posted: 21 Aug 2000

See all articles by Tarun Khanna

Tarun Khanna

Harvard University - Strategy Unit

Jan W. Rivkin

Harvard Business School, Strategy Unit

Date Written: August 2000

Abstract

We conceive of emerging market business groups as tight networks of relationships embedded within the looser network that constitutes the economy. Using data from Chile, we identify the social and economic ties that robustly delineate groups from the larger economy: owner overlap, indirect equity ties, and director interlocks. Contrary to earlier field-based and theoretical studies, neither family bonds nor direct equity interlocks strongly distinguish groups. Non-equity relationships affect expected economic returns and are not mere vestiges of group history. The analysis sheds light on what determines the strength of ties and how boundedly rational individuals simplify complex, inter-firm networks.

Suggested Citation

Khanna, Tarun and Rivkin, Jan, Ties that Bind Business Groups: Evidence from an Emerging Market (August 2000). HBS Strategy Unit Working Paper No. 00-068. Available at SSRN: https://ssrn.com/abstract=238991 or http://dx.doi.org/10.2139/ssrn.238991

Tarun Khanna (Contact Author)

Harvard University - Strategy Unit ( email )

Harvard Business School
Boston, MA 02163
United States
617-495-6038 (Phone)
617-495-0355 (Fax)

Jan Rivkin

Harvard Business School, Strategy Unit ( email )

Harvard Business School
Soldiers Field Road
Boston, MA 02163
United States
617-495-6690 (Phone)
617-495-0355 (Fax)

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