Power dependence, diversification strategy, and performance in keiretsu member firms

Hicheon Kim · Robert E. Hoskisson · William P. Wan

282 citations0/0 files storedStrategic Management Journal

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International Business and FDI Corporate Finance and Governance Business Strategy and Innovation

Abstract

Abstract Conceptualizing the keiretsu as a power‐dependence system, we propose that benefits accruing from keiretsu affiliation differ across member firms, depending on their power in (or dependence on) the keiretsu. By integrating power with governance and internal market perspectives on group affiliation, we develop and find general support for the hypotheses that powerful keiretsu member firms are able to place more emphasis on growth in pursuing product and international diversification, whereas less powerful keiretsu member firms are subject to strong monitoring and emphasize profitability. These findings provide support to the study's proposition that power‐dependence relationships in a keiretsu influence member firms' appropriation of group affiliation benefits in pursuing diversification strategies. Copyright © 2004 John Wiley & Sons, Ltd.

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References

1992A power primer.1984Corporate financing and investment decisions when firms have information that investors do not have 2011External Control of Organizations: Resource Dependence Perspective 1979The External Control of Organizations: A Resource Dependence Perspective 1984Financial Intermediation and Delegated Monitoring 1962Power-Dependence Relations 1985The Structure of Corporate Ownership: Causes and Consequences 1993Handbook of industrial and organizational psychology

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