The diversified business group as an innovative organisational model for large state-enterprise reform in China and Vietnam

Berhanu Abegaz

International Journal of Entrepreneurship and Innovation Management, 2005, vol. 5, issue 5/6, 379-400

Abstract: The diversified business group (DBG) is a ubiquitous institution in developing economies. It is a formal inter-firm network that typically involves financial institutions, distributors and manufacturers. Groupwise diversification is viewed by some as a novel form of organisational innovation by entrepreneurial tycoons while others see it as an instrument for rent seeking. Inspired by Korean chaebols but chastened by Russian financial-industrial groups, China and Vietnam are creating business groups out of State enterprises. After reviewing the theory and cross-country experience, this paper concludes that selective economic grouping can be an efficient transitional organisation. DBGs can facilitate government monitoring, exploitation of scale economies for scarce managerial talent, better risk management, and realisation of network and scope economies. Success in incubating national champions is, however, predicated on a high technocratic capability for restraining abuse of market power, nurturing competitive market institutions, properly sequencing large-scale privatisation, and crafting WTO-compatible industrial and technology policies.

Keywords: diversified business group; organisational innovation; late-industrialisation; state enterprises; China; Vietnam; state enterprise reform; developing economies; developing countries; inter-firm networks; groupwise diversification. (search for similar items in EconPapers)
Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.inderscience.com/link.php?id=6995 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijeima:v:5:y:2005:i:5/6:p:379-400

Access Statistics for this article

More articles in International Journal of Entrepreneurship and Innovation Management from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().