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The role of family management and family ownership in diversification: The case of family business groups

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  • Hsi-Mei Chung

Abstract

This study undertook a panel data analysis of the top 100 family business groups in Taiwan between the years 1988 and 2002 to investigate the role of family management and family ownership structures in diversification using an agency theory approach. The results show that, in the institutional context under study, family management and family ownership play key roles in diversification decisions in family business groups. Specifically, the likelihood of diversification declines as a controlling family assigns more family members to an affiliate firm’s key leadership positions. In contrast, the level of diversification increases as the degree of pyramidal ownership structure increases. The research findings presented in this study (1) clarify the roles that family management and the pyramidal ownership structure play in the diversification decisions of family business groups and (2) provide insights into family business groups’ growth. Copyright Springer Science+Business Media, LLC 2013

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  • Hsi-Mei Chung, 2013. "The role of family management and family ownership in diversification: The case of family business groups," Asia Pacific Journal of Management, Springer, vol. 30(3), pages 871-891, September.
    • Handle: RePEc:kap:asiapa:v:30:y:2013:i:3:p:871-891
    DOI: 10.1007/s10490-012-9284-x
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    3. Mondal, Arindam & Gadepalli, Sarada Devi, 2020. "Does Knowledge from Home Markets Boost Outward Foreign Direct Investments of Emerging Economy Multinationals? Evidence from Indian Family EMNEs," American Business Review, Pompea College of Business, University of New Haven, vol. 23(2), pages 211-240, November.
    4. Torres, Juan Pablo & Jara Bertín, Mauricio & López-Iturriaga, Félix J., 2017. "Corporate control and firm value: The bright side of business groups," Journal of Family Business Strategy, Elsevier, vol. 8(2), pages 99-108.
    5. Zinnia Mitra Bose & Indrani Chakraborty, 2022. "Effects of diversification on firm performance: an analysis of Indian firms," Indian Economic Review, Springer, vol. 57(2), pages 469-511, December.
    6. Colin C. J. Cheng & Eric C. Shiu, 2021. "Establishing a typology of open innovation strategies and their differential impacts on innovation success in an Asia-Pacific developed economy," Asia Pacific Journal of Management, Springer, vol. 38(1), pages 65-89, March.
    7. Cornelius Hafner, 2021. "Diversification in family firms: a systematic review of product and international diversification strategies," Review of Managerial Science, Springer, vol. 15(3), pages 529-572, April.
    8. Islam, Nazrul & Wang, Qidong & Marinakis, Yorgos & Walsh, Steven, 2022. "Family enterprise and technological innovation," Journal of Business Research, Elsevier, vol. 147(C), pages 208-221.

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