Diversification as a Circumvention Strategy to Institutional Constraints in China: An Official-Entrepreneur Exchange Perspective

Peihong Xie, Xin Li, Sibin Wu

    Research output: Contribution to conferencePaperResearchpeer-review

    Abstract

    While unrelated diversification (i.e., conglomeration) is deemed value-destroying in the West, many Chinese private firms have been enthusiastically pursuing such a growth strategy. Conventional institutional view of diversification sees conglomerates as responses to market imperfections in emerging economies and believes conglomeration is value-creating because conglomerates can effectively fill the institutional voids in the emerging markets. Our literature review shows that the conventional institutional view on conglomeration mainly focuses on the value-creating aspects while neglects the socially counterproductive rent-seeking aspects of conglomeration strategy in institution-weak countries (Khanna & Palepu, 2000). In this paper, we fill the gap by examining some unconventional diversifications and point out their rent-seeking nature in China. We have proposed an official-entrepreneur exchange theoretical model to account for such unconventional diversifications. Therefore, we adopt a case study approach to theory-building (Eisenhardt, 1989). We have made two contributions to knowledge. One is that we contribute to the diversification literature by identifying the unconventional diversification phenomenon and proposing a theoretical framework to account for it. The other is that we contribute to the institution-based view of strategy.
    Original languageEnglish
    Publication date2014
    Publication statusPublished - 2014
    Event 2014 IACMR Conference: Exploring New Concepts and Theories from Chinese Management - The China National Convention Center, Beijing, China
    Duration: 18 Jun 201422 Jun 2014
    Conference number: 6
    http://www.iacmr.org/v2en/Detail.asp?id=313

    Conference

    Conference 2014 IACMR Conference: Exploring New Concepts and Theories from Chinese Management
    Number6
    LocationThe China National Convention Center
    CountryChina
    CityBeijing
    Period18/06/201422/06/2014
    Internet address

    Bibliographical note

    CBS Library does not have access to the material

    Cite this

    Xie, P., Li, X., & Wu, S. (2014). Diversification as a Circumvention Strategy to Institutional Constraints in China: An Official-Entrepreneur Exchange Perspective. Paper presented at 2014 IACMR Conference: Exploring New Concepts and Theories from Chinese Management, Beijing, China.
    Xie, Peihong ; Li, Xin ; Wu, Sibin. / Diversification as a Circumvention Strategy to Institutional Constraints in China : An Official-Entrepreneur Exchange Perspective. Paper presented at 2014 IACMR Conference: Exploring New Concepts and Theories from Chinese Management, Beijing, China.
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    abstract = "While unrelated diversification (i.e., conglomeration) is deemed value-destroying in the West, many Chinese private firms have been enthusiastically pursuing such a growth strategy. Conventional institutional view of diversification sees conglomerates as responses to market imperfections in emerging economies and believes conglomeration is value-creating because conglomerates can effectively fill the institutional voids in the emerging markets. Our literature review shows that the conventional institutional view on conglomeration mainly focuses on the value-creating aspects while neglects the socially counterproductive rent-seeking aspects of conglomeration strategy in institution-weak countries (Khanna & Palepu, 2000). In this paper, we fill the gap by examining some unconventional diversifications and point out their rent-seeking nature in China. We have proposed an official-entrepreneur exchange theoretical model to account for such unconventional diversifications. Therefore, we adopt a case study approach to theory-building (Eisenhardt, 1989). We have made two contributions to knowledge. One is that we contribute to the diversification literature by identifying the unconventional diversification phenomenon and proposing a theoretical framework to account for it. The other is that we contribute to the institution-based view of strategy.",
    keywords = "Diversification, Conglomerate, Institution, Rent-seeking, Exchange",
    author = "Peihong Xie and Xin Li and Sibin Wu",
    note = "CBS Library does not have access to the material; null ; Conference date: 18-06-2014 Through 22-06-2014",
    year = "2014",
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    Diversification as a Circumvention Strategy to Institutional Constraints in China : An Official-Entrepreneur Exchange Perspective. / Xie, Peihong; Li, Xin; Wu, Sibin.

    2014. Paper presented at 2014 IACMR Conference: Exploring New Concepts and Theories from Chinese Management, Beijing, China.

    Research output: Contribution to conferencePaperResearchpeer-review

    TY - CONF

    T1 - Diversification as a Circumvention Strategy to Institutional Constraints in China

    T2 - An Official-Entrepreneur Exchange Perspective

    AU - Xie, Peihong

    AU - Li, Xin

    AU - Wu, Sibin

    N1 - CBS Library does not have access to the material

    PY - 2014

    Y1 - 2014

    N2 - While unrelated diversification (i.e., conglomeration) is deemed value-destroying in the West, many Chinese private firms have been enthusiastically pursuing such a growth strategy. Conventional institutional view of diversification sees conglomerates as responses to market imperfections in emerging economies and believes conglomeration is value-creating because conglomerates can effectively fill the institutional voids in the emerging markets. Our literature review shows that the conventional institutional view on conglomeration mainly focuses on the value-creating aspects while neglects the socially counterproductive rent-seeking aspects of conglomeration strategy in institution-weak countries (Khanna & Palepu, 2000). In this paper, we fill the gap by examining some unconventional diversifications and point out their rent-seeking nature in China. We have proposed an official-entrepreneur exchange theoretical model to account for such unconventional diversifications. Therefore, we adopt a case study approach to theory-building (Eisenhardt, 1989). We have made two contributions to knowledge. One is that we contribute to the diversification literature by identifying the unconventional diversification phenomenon and proposing a theoretical framework to account for it. The other is that we contribute to the institution-based view of strategy.

    AB - While unrelated diversification (i.e., conglomeration) is deemed value-destroying in the West, many Chinese private firms have been enthusiastically pursuing such a growth strategy. Conventional institutional view of diversification sees conglomerates as responses to market imperfections in emerging economies and believes conglomeration is value-creating because conglomerates can effectively fill the institutional voids in the emerging markets. Our literature review shows that the conventional institutional view on conglomeration mainly focuses on the value-creating aspects while neglects the socially counterproductive rent-seeking aspects of conglomeration strategy in institution-weak countries (Khanna & Palepu, 2000). In this paper, we fill the gap by examining some unconventional diversifications and point out their rent-seeking nature in China. We have proposed an official-entrepreneur exchange theoretical model to account for such unconventional diversifications. Therefore, we adopt a case study approach to theory-building (Eisenhardt, 1989). We have made two contributions to knowledge. One is that we contribute to the diversification literature by identifying the unconventional diversification phenomenon and proposing a theoretical framework to account for it. The other is that we contribute to the institution-based view of strategy.

    KW - Diversification

    KW - Conglomerate

    KW - Institution

    KW - Rent-seeking

    KW - Exchange

    M3 - Paper

    ER -

    Xie P, Li X, Wu S. Diversification as a Circumvention Strategy to Institutional Constraints in China: An Official-Entrepreneur Exchange Perspective. 2014. Paper presented at 2014 IACMR Conference: Exploring New Concepts and Theories from Chinese Management, Beijing, China.