Lin, W. T., and Li, M. C. 2018. Taiwan Business Groups Growth in Chinese Market: Managerial Limitations Perspective. NTU Management Review, 28 (3): 205-232. https://doi.org/10.6226/NTUMR.201812_28(3).0007
Wen-Ting Lin, Institute of International Business, National Cheng Kung University
Man-Chi Li, Department of Business Administration, National Chung Cheng University
Abstract
This paper examines the managerial limitations, mostly concerning those business groups whose headquarter is in Taiwan and the group-affiliated firms are investing in China. We used cross section data on China-oriented investment undertaken by 194 business groups from 2008 through 2012 to test the hypotheses. The empirical results indicate that business groups face a different degree of managerial limitations in various locations, and in particular, that the smallest managerial limitations occurred in Central China. Moreover, (1) when business groups invest in many areas at the same time and (2) the equity stake in group-affiliated firms held by business-group headquarters is low, the Penrose effect would be low. Finally, when business groups have rich diversified experiences, the Penrose effect owing to business groups' growth in Chinese market would be weakened.
Keywords
managerial limitationspenrose effectchinese marketbusiness groups