Abstract
This study examines the effects of firm resources on entrepreneur subsidiaries of business groups. Resource-based theory is the foundation for understanding how resource endowment drives firm growth as well as its effect on entrepreneur subsidiaries’ performance. With the growth strategy of business groups as the focus herein, our empirical research includes multi-level analysis and robustness analysis of the top 300 business groups in Taiwan and their 10,028 entrepreneur subsidiaries. The results from hierarchical linear modeling show that entrepreneur subsidiaries’ resources positively affect their performance. Business groups’ resources and growth strategy also positively impact their performance, thus confirming the multi-level phenomena. This study offers a practical contribution for business groups to have a better understanding of the applicability of a firm’s resources and for entrepreneur subsidiaries to execute a proper growth strategy.
Similar content being viewed by others
References
Andersson, U., Forsgren, M., & Holm, U. (2002). The strategic impact of external networks: Subsidiary performance and competence development in the multinational corporation. Strategic Management Journal, 23(11), 979–996.
Andrieș, A. M., & Vîrlan, C. A. (2017). Risk arbitrage in emerging Europe: Are cross-border mergers and acquisition deals more risky? Economic Research-Ekonomska Istraživanja, 30(1), 1367–1389.
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.
Barney, J. B. (1986). Strategic factor markets: Expectations, luck, and business strategy. Management Science, 32(10), 1231–1241.
Benavides-Espinosa, M. M., & Roig-Dobón, S. (2011). The role of entrepreneurs in transferring knowledge through human resource management and joint venture. International Journal of Manpower, 32(1), 117–131.
Berry, C. H. (1975). Corporate growth and diversification. Princeton, NJ. Princeton University Press.
Björkman, I., Barner-Rasmussen, W., & Li, L. (2004). Managing knowledge transfer in MNCs: The impact of headquarters control mechanisms. Journal of International Business Studies, 35(5), 443–455.
Borlea, S. N., Achim, M. V., & Mare, C. (2017). Board characteristics and firm performances in emerging economies. Lessons from Romania. Economic Research-Ekonomska Istraživanja, 30(1), 55–75.
Brlečić Valčić, S., & Bagarić, L. (2017). Return on strategic effectiveness – The need for synchronising growth and development strategies in the hotel industry using revenue management. Economic Research-Ekonomska Istraživanja, 30(1), 1631–1654.
Bryk, M. J., & Raudenbush, S. W. (1992). Hierarchical linear models: Applications and data analysis method. New Park. Sage: California.
Bryk, A. S., Raudenbush, S. W., & Congdon, R. T. (1996). HLM. Hierarchical linear and nonlinear modeling with the HLM/2L and HLM/3L programs. Chicago: Scientific Software International, Inc.
Canabal, A., & White, G. O., III. (2008). Entry mode research: Past and future. International Business Review, 17(3), 267–284.
Chatterjee, S., & Wernerfelt, B. (1991). The link between resources and type of diversification: Theory and evidence. Strategic Management Journal, 12(1), 33–48.
Clark, K., & Ramachandran, I. (2018). Subsidiary entrepreneurship and entrepreneurial opportunity: An institutional perspective. Journal of International Management In press.
Cohen, J. (1988). Statistical power analysis for the behavioral sciences (2nd ed.). Hillsdale, NJ: Eribaum.
Collis, D.J and Montgomery, C.A (1997). Corporate Strategy: Resources and The Scope of The Firm. Chicago: Mcgraw-Hill.
Errunza, V., & Senbet, L. (1984). International corporate diversification, market valuation, and size-adjusted evidence. Journal of Finance, 36, 401–417.
Gillies, R. R., Shortell, S. M., & Young, G. J. (1997). Best practices in managing organized delivery systems. Hospital & Health Services Administration, 42(3), 299–321.
Govindarajam, V., & Gupta, A. K. (1985). Linking control system to business unit strategy: Impact on performance. Accounting, Organizations and Society, 10, 51–66.
Grant, R. M. (1991). The resources-based theory of competitive advantage: Implication for strategy formulation. California Management Review, 33(3), 114–135.
Jiang, X., Liu, H., Fey, C., & Jiang, F. (2018). Entrepreneurial orientation, network resource acquisition, and firm performance: A network approach. Journal of Business Research, 87, 46–57.
Kraus, S., Ribeiro-Soriano, D., & Schüssler, M. (2018). Fuzzy-set qualitative comparative analysis (fsQCA) in entrepreneurship and innovation research - the rise of a method. International Entrepreneurship and Management Journal, 14(1), 15–34.
Lee, H. U., & Park, J. H. (2006). Top team diversity, internationalization and the mediating effect of international alliances. British Journal of Management, 17, 195–213.
Lin, F. J., Chen, Y. M., & Lo, F. Y. (2014). The persistence of economic profit. International Entrepreneurship and Management Journal, 10(4), 767–780.
Link, A. N., & Yang, U. Y. (2018). On the growth of Korean Technoparks. International Entrepreneurship and Management Journal, 14(2), 405–410.
Lo, F. Y. (2013). The dynamic adjustment of environment, strategy, structure, and resources on firm performance. International Entrepreneurship and Management Journal, 9(2), 217–227.
Lo, F. Y., & Shu, M. K. (2016). Business Group’s diversification strategy and sustainability. International Journal of Business and Economics, 15(1), 35–49.
Lo, F. Y., Chiao, Y. C., & Yu, C. M. (2016). Network and institutional effects on SMEs’ entry strategies. Management International Review, 56(4), 531–563.
Lofti, M., Yousefi, A., & Jafari, S. (2018). The effect of emerging green market on green entrepreneurship and sustainable development in knowledge-based companies. Sustainability, 10(7), 2308–2326.
Luo, Y. (2001). Determinants of entry in an emerging economy: A multilevel approach. Journal of Management Studies, 38, 443–472.
Mas-Verdu, F., Ribeiro, D., & Dobón, S. R. (2010). Government policies and services: An approach to the international context. The Service Industries Journal, 30(1), 1–10.
Miller, K. D. (1993). Industry and country effects on managers’ perceptions of environmental uncertainties. Journal of International Business Studies, 24(4), 693–714.
Mishina, Y., Pollock, T. G., & Porac, J. F. (2004). Are more resources always better for growth? Resource stickiness in market and product expansion. Strategic Management Journal, 25(12), 1179–1197.
Morck, R., & Yeung, B. (1991). Why investors value multinationality? Journal of Business, 64, 165–187.
Palacios-Marqués, D., Roig-Dobón, S., & Comeig, I. (2017). Background factors to innovation performance: Results of an empirical study using fsQCA methodology. Quality & Quantity, 51(5), 1939–1953.
Penrose, E. (1959). The theory of the growth of the firm. New York: Wiley.
Pitelis, C. N. (2004). Edith Penrose and the resource-based view of (international) business strategy. International Business Review, 13, 523–532.
Ribeiro-Soriano, D., & Zeng, J. (2018). Some issues in recent entrepreneurship approaches: Joining previous and current theories. International Entrepreneurship and Management Journal, 14(1), 1–4.
Robbins, S. P., & Coulter, M. (2014). Management, 12/E. Prentice Hall.
Sambharya, R. B. (1995). The combined effect of international diversification and product diversification strategies on the performance of U.S.-based multinational companies. Management International Review, 35(3), 197–218.
Teece, D., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533.
Thomas, D. E., & Eden, L. (2004). What is the shape of the multinationality-performance relationship? Multinational Business Review, 12, 89–110.
Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 272–280.
Willms, J. D., & Raudenbush, S. W. (1989). A longitudinal hierarchical linear model for estimating school effects and their stability. Journal of Educational Measurement, 26(3), 209–232.
Acknowledgements
The authors thank the financial support of the project “Collaborative Economy, Social Economy and Welfare” (DER2015-65519-C2-1-R), financed by the Ministry of Economy and Competitiveness of the Government of Spain.
Author information
Authors and Affiliations
Corresponding author
Additional information
Publisher’s Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
About this article
Cite this article
Lo, FY., Huarng, KH. & Rey-Martí, A. Entrepreneur subsidiary of business groups from emerging markets: a multi-level perspective. Int Entrep Manag J 15, 471–483 (2019). https://doi.org/10.1007/s11365-019-00563-y
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11365-019-00563-y