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Diversification, resource concentration, and business group performance: Evidence from Taiwan

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  • Chien-Nan Chen
  • Wenyi Chu

Abstract

This study examines the impact of resource configuration, specifically diversification and resource concentration, on the performance of business groups in an emerging economy. Diversification indicates the product/market portfolio of a business group, while resource concentration illustrates the degree of resource dispersion among different affiliates within a business group. Based on the data collected from 125 Taiwanese business groups from 2004 to 2007, this study finds that resource concentration positively influences the performance of business groups, while diversification has a negative impact on the performance of business groups. The findings of this study provide support to the resource-based view and the market power perspective of business groups. This study also finds that the appropriate organizational form may change over time, confirming the institution-based view of business groups in emerging economies. Copyright Springer Science+Business Media, LLC 2012

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  • Chien-Nan Chen & Wenyi Chu, 2012. "Diversification, resource concentration, and business group performance: Evidence from Taiwan," Asia Pacific Journal of Management, Springer, vol. 29(4), pages 1045-1061, December.
    • Handle: RePEc:kap:asiapa:v:29:y:2012:i:4:p:1045-1061
    DOI: 10.1007/s10490-010-9245-1
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    Cited by:

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    7. Xue-Feng Shao & Kostas Gouliamos & Ben Nan-Feng Luo & Shigeyuki Hamori & Stephen Satchell & Xiao-Guang Yue & Jane Qiu, 2020. "Diversification and Desynchronicity: An Organizational Portfolio Perspective on Corporate Risk Reduction," Risks, MDPI, vol. 8(2), pages 1-16, May.
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    9. Gyan, Alex Kwaku & Brahmana, Rayenda & Bakri, Abdul Karim, 2017. "Diversification strategy, efficiency, and firm performance: Insight from emerging market," Research in International Business and Finance, Elsevier, vol. 42(C), pages 1103-1114.

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