Abstract
The hierarchically nested set of business groups that result from
110 Mexican firms sharing corporate directors (i.e. interlocking
directors) is analysed using social network tools. It is argued that
these groupings are one of the many dimensions that should be employed
to understand the complex nature of 'business groups' broadly understood.
The hypothesis that business groups are responses 'to market failures
that arise in the particular institutional contexts of emerging economies'
(Khanna and Rivkin, Strategic Management Journal, 22 (2001), p. 46)
is tested using the groups constructed from data on interlocking
directorates. The results show that as firms belong to more of the
same sets of groups, their financial performance tends to be more
similar, thus supporting the idea that 'groups can make up for under-developed
institutions, thereby reducing transaction costs' (Khanna and Yafeh,
Journal of Economic Literature, 45 (2007), pp. 340-341). © 2011
The Author(s). British Journal of Management © 2011 British Academy
of Management.
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