The emergence and organizational persistence of business groups in China, Japan, and Sweden

Lihua Zhang, Hans Sjögren and Miki Kishida

Industrial and Corporate Change, 2016, vol. 25, issue 6, 885-902

Abstract: The existence of business groups has to be discussed in a systematic and comparative way. This article analyzes business groups in three countries, China, Japan, and Sweden, by providing a view as to why and how business groups solve economic problems, and how the specific national context of the group affects its substance and performance. Our first observation is that the business groups studied emerged at times of institutional instability and persisted, thanks to cooperative capitalism and an export-oriented economy. Second, our business groups have used a diversification strategy at the group level in order to share risks and reduce costs at the firm level. Third, business groups seemed to reduce problems associated with high management costs and risk when many industries were held together in a single, large enterprise. With regard to internal markets, there seemed to be national differences in intra-firm behavior and the ways in which national governments mobilized business groups to reach certain economic and social goals. The emergence and persistence of successful business groups indicate that the Anglo-Saxon model of the firm is neither the only one, nor superior.

Date: 2016
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