Advertisement

Entrepreneur subsidiary of business groups from emerging markets: a multi-level perspective

  • Fang-Yi Lo
  • Kun-Huang HuarngEmail author
  • Andrea Rey-Martí
Article

Abstract

This study examines the effects of firm resources on entrepreneur subsidiaries of business groups. Resource-based theory is the foundation for understanding how resource endowment drives firm growth as well as its effect on entrepreneur subsidiaries’ performance. With the growth strategy of business groups as the focus herein, our empirical research includes multi-level analysis and robustness analysis of the top 300 business groups in Taiwan and their 10,028 entrepreneur subsidiaries. The results from hierarchical linear modeling show that entrepreneur subsidiaries’ resources positively affect their performance. Business groups’ resources and growth strategy also positively impact their performance, thus confirming the multi-level phenomena. This study offers a practical contribution for business groups to have a better understanding of the applicability of a firm’s resources and for entrepreneur subsidiaries to execute a proper growth strategy.

Keywords

Business groups Emerging markets Entrepreneur subsidiary Performance Multi-level perspective 

Notes

Acknowledgements

The authors thank the financial support of the project “Collaborative Economy, Social Economy and Welfare” (DER2015-65519-C2-1-R), financed by the Ministry of Economy and Competitiveness of the Government of Spain.

References

  1. Andersson, U., Forsgren, M., & Holm, U. (2002). The strategic impact of external networks: Subsidiary performance and competence development in the multinational corporation. Strategic Management Journal, 23(11), 979–996.Google Scholar
  2. Andrieș, A. M., & Vîrlan, C. A. (2017). Risk arbitrage in emerging Europe: Are cross-border mergers and acquisition deals more risky? Economic Research-Ekonomska Istraživanja, 30(1), 1367–1389.Google Scholar
  3. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.Google Scholar
  4. Barney, J. B. (1986). Strategic factor markets: Expectations, luck, and business strategy. Management Science, 32(10), 1231–1241.Google Scholar
  5. Benavides-Espinosa, M. M., & Roig-Dobón, S. (2011). The role of entrepreneurs in transferring knowledge through human resource management and joint venture. International Journal of Manpower, 32(1), 117–131.Google Scholar
  6. Berry, C. H. (1975). Corporate growth and diversification. Princeton, NJ. Princeton University Press.Google Scholar
  7. Björkman, I., Barner-Rasmussen, W., & Li, L. (2004). Managing knowledge transfer in MNCs: The impact of headquarters control mechanisms. Journal of International Business Studies, 35(5), 443–455.Google Scholar
  8. Borlea, S. N., Achim, M. V., & Mare, C. (2017). Board characteristics and firm performances in emerging economies. Lessons from Romania. Economic Research-Ekonomska Istraživanja, 30(1), 55–75.Google Scholar
  9. Brlečić Valčić, S., & Bagarić, L. (2017). Return on strategic effectiveness – The need for synchronising growth and development strategies in the hotel industry using revenue management. Economic Research-Ekonomska Istraživanja, 30(1), 1631–1654.Google Scholar
  10. Bryk, M. J., & Raudenbush, S. W. (1992). Hierarchical linear models: Applications and data analysis method. New Park. Sage: California.Google Scholar
  11. Bryk, A. S., Raudenbush, S. W., & Congdon, R. T. (1996). HLM. Hierarchical linear and nonlinear modeling with the HLM/2L and HLM/3L programs. Chicago: Scientific Software International, Inc.Google Scholar
  12. Canabal, A., & White, G. O., III. (2008). Entry mode research: Past and future. International Business Review, 17(3), 267–284.Google Scholar
  13. Chatterjee, S., & Wernerfelt, B. (1991). The link between resources and type of diversification: Theory and evidence. Strategic Management Journal, 12(1), 33–48.Google Scholar
  14. Clark, K., & Ramachandran, I. (2018). Subsidiary entrepreneurship and entrepreneurial opportunity: An institutional perspective. Journal of International Management In press.Google Scholar
  15. Cohen, J. (1988). Statistical power analysis for the behavioral sciences (2nd ed.). Hillsdale, NJ: Eribaum.Google Scholar
  16. Collis, D.J and Montgomery, C.A (1997). Corporate Strategy: Resources and The Scope of The Firm. Chicago: Mcgraw-Hill.Google Scholar
  17. Errunza, V., & Senbet, L. (1984). International corporate diversification, market valuation, and size-adjusted evidence. Journal of Finance, 36, 401–417.Google Scholar
  18. Gillies, R. R., Shortell, S. M., & Young, G. J. (1997). Best practices in managing organized delivery systems. Hospital & Health Services Administration, 42(3), 299–321.Google Scholar
  19. Govindarajam, V., & Gupta, A. K. (1985). Linking control system to business unit strategy: Impact on performance. Accounting, Organizations and Society, 10, 51–66.Google Scholar
  20. Grant, R. M. (1991). The resources-based theory of competitive advantage: Implication for strategy formulation. California Management Review, 33(3), 114–135.Google Scholar
  21. Jiang, X., Liu, H., Fey, C., & Jiang, F. (2018). Entrepreneurial orientation, network resource acquisition, and firm performance: A network approach. Journal of Business Research, 87, 46–57.Google Scholar
  22. Kraus, S., Ribeiro-Soriano, D., & Schüssler, M. (2018). Fuzzy-set qualitative comparative analysis (fsQCA) in entrepreneurship and innovation research - the rise of a method. International Entrepreneurship and Management Journal, 14(1), 15–34.Google Scholar
  23. Lee, H. U., & Park, J. H. (2006). Top team diversity, internationalization and the mediating effect of international alliances. British Journal of Management, 17, 195–213.Google Scholar
  24. Lin, F. J., Chen, Y. M., & Lo, F. Y. (2014). The persistence of economic profit. International Entrepreneurship and Management Journal, 10(4), 767–780.Google Scholar
  25. Link, A. N., & Yang, U. Y. (2018). On the growth of Korean Technoparks. International Entrepreneurship and Management Journal, 14(2), 405–410.Google Scholar
  26. Lo, F. Y. (2013). The dynamic adjustment of environment, strategy, structure, and resources on firm performance. International Entrepreneurship and Management Journal, 9(2), 217–227.Google Scholar
  27. Lo, F. Y., & Shu, M. K. (2016). Business Group’s diversification strategy and sustainability. International Journal of Business and Economics, 15(1), 35–49.Google Scholar
  28. Lo, F. Y., Chiao, Y. C., & Yu, C. M. (2016). Network and institutional effects on SMEs’ entry strategies. Management International Review, 56(4), 531–563.Google Scholar
  29. Lofti, M., Yousefi, A., & Jafari, S. (2018). The effect of emerging green market on green entrepreneurship and sustainable development in knowledge-based companies. Sustainability, 10(7), 2308–2326.Google Scholar
  30. Luo, Y. (2001). Determinants of entry in an emerging economy: A multilevel approach. Journal of Management Studies, 38, 443–472.Google Scholar
  31. Mas-Verdu, F., Ribeiro, D., & Dobón, S. R. (2010). Government policies and services: An approach to the international context. The Service Industries Journal, 30(1), 1–10.Google Scholar
  32. Miller, K. D. (1993). Industry and country effects on managers’ perceptions of environmental uncertainties. Journal of International Business Studies, 24(4), 693–714.Google Scholar
  33. Mishina, Y., Pollock, T. G., & Porac, J. F. (2004). Are more resources always better for growth? Resource stickiness in market and product expansion. Strategic Management Journal, 25(12), 1179–1197.Google Scholar
  34. Morck, R., & Yeung, B. (1991). Why investors value multinationality? Journal of Business, 64, 165–187.Google Scholar
  35. Palacios-Marqués, D., Roig-Dobón, S., & Comeig, I. (2017). Background factors to innovation performance: Results of an empirical study using fsQCA methodology. Quality & Quantity, 51(5), 1939–1953.Google Scholar
  36. Penrose, E. (1959). The theory of the growth of the firm. New York: Wiley.Google Scholar
  37. Pitelis, C. N. (2004). Edith Penrose and the resource-based view of (international) business strategy. International Business Review, 13, 523–532.Google Scholar
  38. Ribeiro-Soriano, D., & Zeng, J. (2018). Some issues in recent entrepreneurship approaches: Joining previous and current theories. International Entrepreneurship and Management Journal, 14(1), 1–4.Google Scholar
  39. Robbins, S. P., & Coulter, M. (2014). Management, 12/E. Prentice Hall.Google Scholar
  40. Sambharya, R. B. (1995). The combined effect of international diversification and product diversification strategies on the performance of U.S.-based multinational companies. Management International Review, 35(3), 197–218.Google Scholar
  41. Teece, D., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533.Google Scholar
  42. Thomas, D. E., & Eden, L. (2004). What is the shape of the multinationality-performance relationship? Multinational Business Review, 12, 89–110.Google Scholar
  43. Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 272–280.Google Scholar
  44. Willms, J. D., & Raudenbush, S. W. (1989). A longitudinal hierarchical linear model for estimating school effects and their stability. Journal of Educational Measurement, 26(3), 209–232.Google Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Feng Chia UniversityTaiwanRepublic of China
  2. 2.National Taipei University of BusinessTaipei CityTaiwan, Republic of China
  3. 3.University of ValenciaValenciaSpain

Personalised recommendations