Are Firms in Corporate Groups More Resilient During an Economic Crisis? Evidence from the Manufacturing Sector in Poland

Barbara Jankowska,Katarzyna Mroczek-Dąbrowska,Marian Gorynia,Marlena Dzikowska

doi:10.7341/20161241

Abstract

Corporate groups are specific types of business networks that generate particular advantages for firms. They allow corporates to reduce costs, develop the pool of resources and increase the flexibility of operations and responses to external shocks among others. The above mentioned benefits are of even greater importance during times of economic turbulence. Their involvement in a corporate group should theoretically allow firms to perform better. The aim of this study is to verify whether corporate group membership truly translated into a firm’s higher input competitiveness and a firm’s better performance during the recent economic crisis. First, we try to investigate if the input competitiveness is higher in the case of firms being members of corporate groups. Second, we test whether the involvement in a corporate group matters for the performance of the firms. Using critical in-depth literature studies and conducting the primary empirical research using the CATI (computer-assisted telephone interviewing) method we strive to verify the following hypothesis - the higher a company’s input competitiveness during the economic crisis, the better a competitive position the company achieves. The empirical research encompasses more than 700 corporates from the manufacturing sector in Poland during the global economic crisis and shortly afterwards. To investigate the issue we use the following methods of statistical analysis – cluster analysis, non-parametric tests and correlation coefficients. The results of the study show that firms involved in both Polish and international corporate groups were more resilient during the economic crisis than those which were not.

Highlights

An economic crisis in the simplest terms is a sharp drop in the economic activity that manifests itself through decreasing GDP, increasing unemployment, decreasing investment activity, turbulent financial markets and increasing factor costs. Gourinchas and Kose (2011) pointed to the fact that the financial crisis that started in 2008 led to the deepest and most synchronized global recession over the past 70 years
Sources of competitive advantage in the period of the economic crisis –corporate group affiliates against the non-group firms We tried to investigate whether the enhanced resources and capabilities of firms operating within the corporate groups, as detailed in the literature, could explain their better performance in the crisis and post–crisis periods
A closer look at the resources and capabilities of firms operating outside corporate groups (FNG), firms participating in Polish corporate groups (FPG) and FIG allows us to state that the highest mean values were reported among FIG (Table 4)

Summary

Introduction

An economic crisis in the simplest terms is a sharp drop in the economic activity that manifests itself through decreasing GDP, increasing unemployment, decreasing investment activity, turbulent financial markets and increasing factor costs. Gourinchas and Kose (2011) pointed to the fact that the financial crisis that started in 2008 led to the deepest and most synchronized global recession over the past 70 years. In the study we wanted to investigate the implications of corporate group affiliation, during the crisis period and shortly after, for the sources of competitive advantage and performance of group affiliated firms.

Objectives

Results

Conclusion