Sea Jin Chang

Economic Performance of Group-Affiliated Companies in Korea: Intragroup Resource Sharing and Internal Business Transactions

This study examined the economic performance of the firms associated with Korean business groups by explicitly addressing groupwide resource sharing and internal business transactions. The results ...

Ownership Structure, Expropriation, and Performance of Group-Affiliated Companies in Korea

In this study, a sample of group-affiliated public firms in Korea was used to examine simultaneous causality between ownership structure and performance. The results show that performance determine...

AN EVOLUTIONARY PERSPECTIVE ON DIVERSIFICATION AND CORPORATE RESTRUCTURING: ENTRY, EXIT, AND ECONOMIC PERFORMANCE DURING 1981–89

This study proposes a theoretical perspective that firms engage in continuous search and selection activities in order to improve their knowledge base and thereby improve their performance. This general framework is applied to the context of corporate evolution. Entry and exit activities are understood as search and selection undertaken by the firm to improve their performance. One of the compelling features of this framework is that firms learn from their past entry experience and approach the next entry in a more focused and directed manner over time. Also, firms acquire additional knowledge from each entry event while applying their existing knowledge base. With a longitudinal (1981-89) data base on entry and exit activities of all publicly traded manufacturing firms in the United States, this study shows that applicability of the firms knowledge base plays an important role in predicting which businesses a firm enters or exits. Finns sequentially enter businesses of similar human resource profiles and firms are more likely to divest lines of business of different profiles. Corporate-level analysis shows that such well-directed entry and exit contribute to the improvement of a firms profitability.

Corporate and industry effects on business unit competitive position

We partition the variances of market shares, which we use as surrogates for competitive position, of the business units of all public manufacturing companies available in the Trinet data base into industry factors, corporate parent-specific factors, and business unit-specific factors. Our results differ somewhat from Rumelts (1991), which decomposed variances in profitability. We find that corporate parent effects on market share are considerably greater than zero when lines of business are defined more narrowly, when small business units are included, and when firms are medium-sized. Our results suggest that the relative importance of corporate, industry, and business unit effects depends on the types of criteria, such as the level of industry aggregation, whether small business units are included, and firm size, that are used to construct samples. Copyright

The impact of modes of entry and resource fit on modes of exit by multibusiness firms

This study examines the choices of modes of entry and exit in the process of new business exploration. We find that exit mode choices are determined by a different set of factors from those that are important for the entry mode decision and the exit decision per se. Our study indicates that when the resource profiles of a parent firm and the business unit are more dissimilar, and there has been less development of firm‐specific idiosyncratic assets, firms are more likely to sell businesses than dissolve them. Further, the study reports a strong relationship between the mode of exit from a line of business (sell‐off vs. dissolution) and the original mode of entry (acquisition versus internal development). Copyright