Coopetition and Corporate Governance within Business Groups

Abstract

The study investigates the intensity of intra-group coopetition in business groups and selected control mechanisms such as concentrated control, interlocking directorate’s policy, adoption of group procedures, type of dominant investor, and role of the corporate parent. The analysis on the sample of business groups listed on the Warsaw Stock Exchange reveals that concentration of control and presence of industry investor as the dominant shareholder are negatively associated with the intensity of coopetition. The interlocking directorate’s policy, presence of individual investor as dominant shareholder, and investment role of the corporate parent are positively linked with the intensity of coopetition. The role of the corporate parent (investment versus coordination) as well as the adoption of universal procedures at the group level remain statistically insignificant for the intensity of the intra-group coopetition. While our results suggest that concentrated ownership and dominant role of the industry investor in business groups may appear to be the optimal choice in the context of insufficient investor protection and hierarchical control system, these mechanisms may constrain the development of intra-group coopetition.