Business group


Business group

In business, a group, business group, corporate group, or (sometimes) alliance is most commonly a legal entity that is a type of conglomerate or holding company consisting of a parent company and subsidiaries. Typical examples are Adidas Group or Icelandair Group.

In a less common and more general sense, a business group is a hybrid organizational form between a firm and market. This is typically a cluster of legally distinct firms with a managerial relationship [ [http://www.jamesrmaclean.com/archives/archive_business_groups.html Business Groups: Between Market and Firm] by James R. Maclean, October 14, 2005. Accessed May 6, 2006.] [ [http://papers.ssrn.com/sol3/papers.cfm?abstract_id=787625 Business Groups in Emerging Markets: Paragons or Parasites?] by Tarun Khanna & Yishay Yafeh, August 2005. Abstract accessed May 6, 2006.] . The relationship between the firms in a group may be formal or informalGranovetter, M. (1994). “Business groups,” in "The Handbook of Economic Sociology" (J. N. Smelser and R. Swedberg, Eds.), pp. 453–475, Princeton Univ. Press, Princeton.] . A keiretsu is one type of business group.

The definition of business group varies. For instance, Leff [Leff 1978:663] defines business group as a group of companies that does business in different markets under common administrative or financial control whose members are linked by relations of interpersonal trust on the bases of similar personal ethnic or commercial background a business group.

Encarnation [Encarnation 1989:45] refers to Indian business houses, emphasizing multiple forms of ties among group members. Powell and Smith-Doerr [Smith-Doerr 1994:388] state that a business group is a network of firms that regularly collaborate over a long time period. Granovetter argues that business groups refers to an intermediate level of binding, excluding on the one hand a set of firms bound merely by short-term alliances and on the other a set of firms legally consolidated into a single unit. Williamson [Williamson 1975, 1985] claims that business groups lie between markets and hierarchies. Khanna and Rivkin [Khanna and Rivkin 1999] suggest that business groups are typically not legal constructs though some regulatory bodies have attempted to codify a definition.

ee also

* Business alliance
* Keiretsu

References


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