Journal Article

Business group affiliation in resource-scarce locations

Lefebvre, Vivien

2023

Overview

Business groups are sets of firms tied together by a centralized control mechanism, and they represent the most common form of business organization worldwide. Business groups have internal labor and capital markets that help them overcome institutional voids. Despite the abundant literature on the location of business groups across countries, little is known about the factors that explain the choice of a location of firms affiliated with (or controlled by) business groups within a country. Building on business group literature and agglomeration economics, we propose in this study that more firms are affiliated with business groups in regions with limited access to strategic resources, finance, and labor. Empirical results based on a large sample of privately held French firms support the idea that business group affiliation is more common in regions with limited access to the workforce. However, we could not find any evidence in support of the argument that the degree of regional financial development influences the likelihood of a business group affiliation. Overall, the study provides evidence that the way businesses are organized, for instance, as business groups, depends on the degree of resource scarcity of the locations in which firms are created.

• Publisher: Springer International Publishing,Springer Nature B.V
• Subject: Business and Management / Business Strategy/Leadership / Capital markets / Conglomerates / Economic Sociology / Economics / Equity / Human Resource Management / Industrial and Organizational Psychology / Labor market / Organization / Organizational Studies / Regions / Securities markets / Sustainability Management / Workforce