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Do internationalizing business group affiliates perform better after promarket reforms? Evidence from Korean SMEs

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Abstract

This study examines how business group affiliation moderates the performance (P) consequences of internationalization (I) by firms from advanced emerging economies that have implemented major promarket reforms. Our theoretical framework integrates institutional and network perspectives with internationalization research to investigate the effects of institutional change on the role of business groups in supporting the internationalization of their affiliates. Using a dataset of 143 publicly listed Korean manufacturing SMEs over a five-year period, our findings provide statistical evidence that business group affiliation has different moderating effects on the I-P relationship according to the degree of internationalization. Specifically, group-affiliated SMEs exhibit a U-shaped I-P relationship while non-affiliated, independent SMEs present an overall downward S-shaped relationship, where group-affiliated SMEs perform better at any level of internationalization. Besides, we also examine the moderating effect of industry characteristics and found that in the case of SMEs in technology-intensive industries, affiliation to a business group enhances firm performance at low and intermediate levels of internationalization. Overall, we conclude that business groups are able to provide benefits to their internationalizing affiliates in an improved institutional context.

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Acknowledgements

We are grateful to professor Joan Manel Batista from ESADE Business School, Universitat Ramon Llull, two anonymous reviewers and APJM Editor-in-Chief Chi-Sum Wong and Senior Editor Vikas Kumar for providing very useful comments. This research has been developed with the support of the Observatory of Spanish Multinational Companies (OEME), a joint initiative of ESADE, ICEX España Exportacion e Inversiones and EY (Ernst & Young).

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  1. ESADE Business School, Ramon Llull University, Avenida Torre Blanca 59, 08172, Sant Cugat, Spain

    Joonho Shin & Xavier Mendoza

  2. Chung-Ang University, 84 Heukseok-Ro, Dongjak-Gu, 156-756, Seoul, South Korea

    Changbum Choi

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  1. Joonho Shin
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  2. Xavier Mendoza
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  3. Changbum Choi
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Correspondence to Joonho Shin.

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Shin, J., Mendoza, X. & Choi, C. Do internationalizing business group affiliates perform better after promarket reforms? Evidence from Korean SMEs. Asia Pac J Manag 39, 805–841 (2022). https://doi.org/10.1007/s10490-021-09751-3

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