the oxford handbook of BUSINESS GROUPS This page intentionally left blank the oxford handbook of ....................................................................................................................................................................... BUSINESS GROUPS ....................................................................................................................................................................... Edited by ASLI M. COLPAN, TAKASHI HIKINO, and JAMES R. LINCOLN 1 3 GreatClarendonStreet,OxfordOX26DP OxfordUniversityPressisadepartmentoftheUniversityofOxford. ItfurtherstheUniversity’sobjectiveofexcellenceinresearch,scholarship, andeducationbypublishingworldwidein Oxford NewYork Auckland CapeTown DaresSalaam HongKong Karachi KualaLumpur Madrid Melbourne MexicoCity Nairobi NewDelhi Shanghai Taipei Toronto Withofficesin Argentina Austria Brazil Chile CzechRepublic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore SouthKorea Switzerland Thailand Turkey Ukraine Vietnam OxfordisaregisteredtrademarkofOxfordUniversityPress intheUKandincertainothercountries PublishedintheUnitedStates byOxfordUniversityPressInc.,NewYork #OxfordUniversityPress2010 Themoralrightsoftheauthorshavebeenasserted DatabaserightOxfordUniversityPress(maker) Firstpublished2010 Allrightsreserved.Nopartofthispublicationmaybereproduced, storedinaretrievalsystem,ortransmitted,inanyformorbyanymeans, withoutthepriorpermissioninwritingofOxfordUniversityPress, orasexpresslypermittedbylaw,orundertermsagreedwiththeappropriate reprographicsrightsorganization.Enquiriesconcerningreproduction outsidethescopeoftheaboveshouldbesenttotheRightsDepartment, OxfordUniversityPress,attheaddressabove Youmustnotcirculatethisbookinanyotherbindingorcover andyoumustimposethesameconditiononanyacquirer BritishLibraryCataloguinginPublicationData Dataavailable LibraryofCongressCataloginginPublicationData Dataavailable TypesetbySPIPublisherServices,Pondicherry,India PrintedinGreatBritain onacid-freepaperby CPIAntonyRowe,Chippenham,Wiltshire ISBN978–0–19–955286–3 1 3 5 7 9 10 8 6 4 2 A CKNOWLEDGEMENTS .................................................................................. We wish to express our gratitude to the many individuals and organizations that helped bring this book to fruition. First and foremost, we are deeply indebted to Mizuho Securities Co., Ltd., whose generous contribution to the Graduate School of Management at Kyoto University provided the financing that carried the project from the earliest planning stages to the preparation and publication of this volume. Mizuho’s support of a highly academic enterprise demonstrates the company’s enlightened recognition of the value of international business scholarship. Other institutional debts are to Kyoto University’s Graduate School of Manage- ment and Doshisha University’s Institute for Technology, Enterprise and Competi- tiveness for their support of the international conference in the fall of 2007, which initiallybroughtthecontributorstothevolumetogetherinastimulatingexchangeof ideasandperspectives.Thatconferenceprovidedthefoundationonwhichthisbook hassincebeenbuilt. Although we lack space here to acknowledge the many individuals who contrib- uted to the substantive workof the volume, we dowish to give explicit recognition to Kazuhiro Asakawa, Mason Carpenter, Michael Carney, Will Mitchell, Keetie Sluyterman,andHughWhittaker. We are truly grateful for the able assistance supplied by the team of editorial professionals at Oxford University Press who oversaw the compilation, editing, production, and marketing of the volume. We particularly thank the leader of that team and our partner at OUP, David Musson, the Business and Management Editor,forhisdecisiontotakeontheproject,hisskillanddiligenceincoordinating its many facets, and his patient and thoughtful encouragement along the way. His commitment and support were absolutely critical to this book becoming areality. OthersontheOUPteamwhodeservementionincludeMatthewDerbyshireand EmmaLambert,AssistantCommissioningEditorsatOUP,andAbigailCoulsonand CarolBestley,ProductionEditors,wholedusthroughthemanylogisticalcomplex- itiesofthepublicationprocess.HilaryWalforddeservesspecialcreditandapprecia- tion for her professional handling of the challenging task of copy editing the individual chapters. Rendering smooth, readable, and stylistically consistent the prose of authors whose first language was in many cases not English and whose topics spanned a good deal of regional, institutional, and disciplinaryesotericawas nosmallfeat. vi acknowledgements Finally, we wish to express our gratitude to the many scholars from all over the world who contributed chapters to the volume. Their patient, careful, and timely responsestoourcriticalcommentsandrequestsforchangesmadeourjobaseditors much more pleasant and manageable. We thank them all for their participation in theproject,andtheircontributionstotheHandbook,whichwehopewillprovetobe ausefulcontributiontothescholarlyunderstandingofbusinessgroups. AsliM.Colpan TakashiHikino JamesR.Lincoln C ONTENTS .......................................... ListofFigures x ListofTables xiii Abbreviations xviii NotesonContributors xxi 1. Introduction 1 AsliM.Colpan,TakashiHikino,andJamesR.Lincoln PART I. THEORETICAL AND HISTORICAL OVERVIEW 2. FoundationsofBusinessGroups:TowardsanIntegratedFramework 15 AsliM.ColpanandTakashiHikino 3. BusinessGroupsinHistoricalPerspectives 67 GeoffreyJonesandAsliM.Colpan PART II. NATIONAL EXPERIENCES OF BUSINESS GROUPS Group 1. Asia 4. BusinessGroupsinPrewarJapan:HistoricalFormationandLegacy 97 HideakiMiyajimaandShinyaKawamoto 5. BusinessNetworksinPostwarJapan:Whither theKeiretsu? 127 JamesR.LincolnandMasahiroShimotani 6. BusinessGroupsinSouthKorea 157 HicheonKim 7. BusinessGroupsinTaiwan 180 Chi-NienChungandIshtiaqP.Mahmood viii contents 8. BusinessGroupsinChina 210 KeunLeeandYoung-SamKang 9. BusinessGroupsinThailand 237 NatenaphaWailerdsakandAkiraSuehiro 10. BusinessGroupsinSingapore 267 LaiSiTsui-AuchandToruYoshikawa 11. BusinessGroupsinIndia 294 JayatiSarkar Group 2. Latin America 12. BusinessGroupsinArgentina 325 EduardoFracchia,LuizMesquita,andJuanQuiroga 13. BusinessGroupsinBrazil 353 DanteM.AldrighiandFernando A.S.Postali 14. BusinessGroupsinChile 387 FernandoLefort 15. BusinessGroupsinMexico 424 TaekoHoshino Group 3. The Middle East, Eastern Europe, and Africa 16. BusinessGroupsinIsrael 459 KonstantinKosenkoandYishayYafeh 17. BusinessGroupsinTurkey 486 AsliM.Colpan 18. BusinessGroupsinRussia 526 SergeiGuriev 19. BusinessGroupsinSouthAfrica 547 AndreaGoldstein contents ix PART III. ECONOMIC, SOCIOPOLITICAL, AND MANAGERIAL UNDERPINNINGS OF BUSINESS GROUPS 20. BusinessGroupsinEmergingMarkets:ParagonsorParasites? 575 TarunKhannaandYishayYafeh 21. TheRiddleoftheGreatPyramids 602 RandallMorck 22. EconomicInstitutionsandtheBoundariesofBusinessGroups 629 RichardN.Langlois 23. BusinessGroupsandtheState:ThePoliticsofExpansion, Restructuring, andCollapse 650 BenRossSchneider 24. CorporateGovernanceofBusinessGroups 670 BrianK.BoydandRobertE.Hoskisson 25. TheKinandtheProfessional:TopLeadershipinFamily BusinessGroups 696 Behlu¨lU¨sdiken 26. DiversificationStrategyandBusinessGroups 717 AndrewDeliosandXufeiMa 27. CapabilityBuildinginBusinessGroups 743 MauroF.Guille´n 28. TechnologicalInnovationandBusinessGroups 763 MikeHobdayandAsliM.Colpan Index 783