Marriage Ties among Large Family Business Groups in an Emerging Economy

Abstract

Although family business groups are widely connected to each other through marriage ties, less attention has been paid to the formation of marriage ties. We develop a framework that specifies how resource considerations of business group families promote marriage ties and how such strategic effects vary among families with distinct social status standing during market transition. Using data of dyadic marriage ties among the 100 largest family business groups in Taiwan over 1973 and 2006, we demonstrate that the formation of marriage ties is a joint process of strategic concerns of resources by family businesses as well as their social status dynamics. Our analysis shows that two business groups are more likely to marry each other when the marriage enhances their internal product and capital markets. However, such effects weaken in business groups of elite families and when external market institutions develop. Moreover, we find that the mitigating effect of external market development is weaker for elite-family groups relative to non-elite family groups. Overall, our study highlights the tradeoffs that family firms confront when they generate marriage ties in emerging economies where traditional social structures and market-oriented transitions coexist.