Unpacking Performance Heterogeneity in Group-Affiliated Firms in Korea

Kyuho Jin, Seok-hyun Hwang

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


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
Publication statusPublished - 1 Jan 2013
Event73rd Annual Meeting of the Academy of Management, AOM 2013: Capitalism in Question - Orlando, 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
ISSN (Print)0065-0668
ISSN (Electronic)2151-6561


Conference73rd Annual Meeting of the Academy of Management, AOM 2013
Country/TerritoryUnited States
Internet address


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