The postentry performance of business groups’ new venture affiliates

Abstract

Using resource dependence theory, this study examines the determinants of firm performance among business groups’ new venture affiliates using a sample of 1512 new venture affiliates associated with 104 large-sized business groups in Taiwan. The empirical findings reveal that improved affiliate postentry performance is linked to the relative size of a business group’s new venture affiliate and the level of autonomy inherent in decision-making. Furthermore, when the product market of a new venture affiliate is resource-related to its affiliated business group’s main business, this affiliate may benefit from resource relatedness with an improved return on equity.JEL Classification: M10, M16, M38