Business Groups and State: A Critical Literature Review Abstract

Unrelatedly diversified business groups are common in emerging markets. Some of their affiliated businesses are amongst the large enterprises sector in their respective markets. These affiliates recently emerge as multinational companies. Due to their economic significance, scholars from various disciplines are increasing their research efforts in order to better explain their formation and evolution. Historically, business groups received state support since they were regarded as agents of economic development. Thus, business groups evolved in relationships with the state. The political economy perspective has provided useful insights into this issue. However, there seems to be further benefits in synthesizing various other research streams in the extant literature on business groups in order to better understand their relationships with the states. In this study, first, the political economy perspective is reviewed. Second, the extant literature on business groups including the agency, social capital, institutional, transaction-cost, resource-based and internationalization theories are reviewed and synthesized. Finally, research questions for future studies are proposed