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 language | English |
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Publication date | 2014 |
Publication status | Published - 2014 |
Event | 2014 IACMR Conference: Exploring New Concepts and Theories from Chinese Management - The China National Convention Center, Beijing, China Duration: 18 Jun 2014 → 22 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 |
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Number | 6 |
Location | The China National Convention Center |
Country/Territory | China |
City | Beijing |
Period | 18/06/2014 → 22/06/2014 |
Internet address |