Although research on business groups and corporate social responsibility has both expanded rapidly during recent years, their relationships are not well understood. Given that business groups, especially in emerging markets, provide employment, financial support, and technological investments into the communities in which they operate, they are argued to be particularly well-situated to address social welfare problems. Hence, an explanation of how business group affiliation affects affiliates’ non-financial performance is needed. The aim of this thesis is to extend business-group-related research by answering the research question: What are the effects of business groups on affiliates’ non-financial performance, and how do the effects vary across economies, business groups, and time periods? In order to address this main research question, the thesis carries out four related studies that answer sub-research questions derived from the main one. Study 1 investigates the business group affiliation effects on affiliates’ non-financial performance. Study 2 investigates how the business group effects may vary across economies. Using a sample of 558 publicly-listed firms from five emerging markets, i.e., mainland China, Hong Kong, Taiwan, South Korea, and India, over the period from 2007 to 2015, both studies examine the environmental, social and corporate governance performance of business group affiliates compared to stand-alone firms and across economies using propensity score matching (PSM) and the ‘difference in difference’ model coupled with PSM (PSM-DID). The results suggest that, first, the performance of business group affiliates is better than that of stand-alone firms in all sampled economies. Second, the improvement in the ESG performance of business group affiliated firms over time is more rapid than that of stand-alone firms in all sampled economies. Study 3 incorporates national-level variables, i.e., the vertical and horizontal control patterns of societies, to investigate how national-level heterogeneities interact with business ties, and jointly affect affiliates’ non-financial performance. A multilevel crossed random effects model is used in the investigation. The results suggest that the vertical connectedness of business groups has a negative effect on their affiliates’ environmental and social performance, but the horizontal connectedness has a positive effect on affiliates’ social performance. Vertical connectedness has a significant effect in societies with a vertical pattern of control, but no effect is found in societies with a horizontal pattern of control, whereas, horizontal connectedness has a significant effect in societies with a horizontal pattern of control, but no effect is found in societies with a vertical pattern of control. Study 4 investigates the national-level institutional development together with business group ownership and examines the interactive effects of external and internal factors. By repeating the method used in Study 3, I find that the political and social institutional development of an economy is positively related to business group affiliates’ ESG performance. State ownership tends to be positively related to the ESG performance and the corporate governance performance of business group affiliates, but the institutional development of an economy depresses the ESG performance of state-owned business group affiliates. Family ownership tends to lower ESG performance, but the ESG performance of family-owned business groups will increase with a higher level of political and social development. The thesis contributes to the international management literature by showing the missing link between business group affiliation and firms’ non-financial performance in different national institutional environments. More specifically, the thesis identifies the mechanisms through which national-level heterogeneities of different emerging economies interact with business-group-level characteristics and jointly affect business group affiliates’ non-financial performance. In addition, I also highlight the need to differentiate the different components of non-financial performance, such as the environmental, social, and corporate governance rating, since business groups will have different effects on each element.
|Qualification||Doctor of Philosophy|
|Award date||19 Dec 2017|
|Publication status||Published - 2018|