Unpacking Performance Heterogeneity in Group-Affiliated Firms in Korea

Kyuho Jin, Seok-hyun Hwang

    Research output: Chapter in book/report/conference proceedingConference contributionpeer-review

    Abstract

    This study investigates how a firm’s profitability is determined in the context of pyramidal business groups. Bringing to forefront ownership network that serves as a governance backbone of pyramidal business groups we offer an explanation of how group burden, a novel kind of affiliation costs borne by affiliate firms, is derived and distributed across affiliate firms with close attention to position in the ownership network. Then, we develop and articulate a causal linkage between the group burden and profitability. Specifically, we argue that affiliate firms occupying central position in the ownership network may suffer low profitability inasmuch as they are less allowed to engage in activities improving their competitive position to take care of the group burden. We empirically test these hypotheses in the context of large family business groups in Korea or Chaebols which control their affiliates through pyramidal ownership network. Consistent with our expectation, we found a negative relation between centrality in the ownership network and profitability for a sample of Chaebol affiliate firms and that this relation was negatively moderated by the amount of group-level resources.
    Original languageEnglish
    Title of host publicationAcademy of Management Proceedings 2013
    EditorsSonia Taneja
    PublisherAcademy of Management
    DOIs
    Publication statusPublished - 1 Jan 2013
    Event73rd Annual Meeting of the Academy of Management, AOM 2013: Capitalism in Question - Orlando, FL, United States
    Duration: 9 Aug 201313 Aug 2013
    http://pd.aom.org/2013/subMenu.asp?mode=setmenu&menuid=14 (Conference program)
    https://journals.aom.org/toc/amproc/2013/1 (Conference proceedings)

    Publication series

    NameAcademy of Management Proceedings
    Number1
    Volume2013
    ISSN (Print)0065-0668
    ISSN (Electronic)2151-6561

    Conference

    Conference73rd Annual Meeting of the Academy of Management, AOM 2013
    Country/TerritoryUnited States
    CityOrlando, FL
    Period9/08/1313/08/13
    Internet address

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