Business Group Dynamics in Emerging Markets
Summary
Business groups in emerging economies comprise networks of legally distinct firms under common control that collaborate to overcome market imperfections and institutional voids. These conglomerates frequently deploy internal labour markets, shared finance mechanisms and inter-firm resource transfers to enhance efficiency and resilience. In contexts of weak formal institutions or fragmented capital markets, group affiliation can yield superior access to credit, facilitate technology adoption and promote risk-sharing across diversified activities. Corporate governance within these groups often reflects concentrated ownership structures, with family or founding shareholders exerting strategic direction. Such governance models influence strategic priorities, from internationalisation pathways to innovation investments and labour productivity initiatives. By mediating between formal regulatory frameworks and local market demands, business groups serve as conduits for technological diffusion, foster competitive advantage among affiliated small and medium-sized enterprises (SMEs) and contribute to economic stability during periods of policy reform and global integration.
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Business Group Dynamics in Emerging Markets publication trend
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Technical terms
Business group: A coalition of legally independent firms under unified control that coordinate resources, governance and strategy to mitigate market and institutional shortcomings.
Internal labour market (ILM): A mechanism within a business group that facilitates the transfer and reallocation of workers among affiliated firms, enhancing flexibility and productivity.
Institutional support: The degree to which formal rules, regulations and enforcement mechanisms in a country facilitate or constrain firm operations and market transactions.
Corporate governance: The system of rules, practices and processes by which a business group ensures accountability, fairness and transparency in its relationships with stakeholders.
References
- Business groups’ internal labour markets and SME labour productivity. Small Business Economics (2023).
- Business group affiliation and SMEs’ international sales intensity and diversification: A multi-country study. International Business Review (2022).
- The Corporate Governance of Business Groups Around the World: A Review and Agenda for Future Research. Corporate Governance An International Review (2024).
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