The Role of Marriage Ties and Political Ties in New Market Entries of Business Groups

Abstract

While the importance of social ties to firms in emerging economies has long been acknowledged, relatively less attention has been directed at how different types of social ties, individually and in combination, affect firm strategy differentially. In this study, we examine how business groups’ various social ties influence business strategies, specifically the entry into new unrelated industries. Using a manually coded dataset that includes intermarriage ties among the 100 largest business group families and their connections to the political regime in Taiwan between 1981 and 2006, we demonstrate that while both intermarriage ties and political ties facilitate market entry, the positive impact of intermarriage ties is mitigated by political ties due to differences in the norms of interactions between kinship networks and political networks. Moreover, intermarriage ties promote both entry into marriage partners’ incumbent industries and entry into new industries jointly with marriage partners. However, the efficacy of intermarriage ties on entry into marriage partners’ incumbent industries is weaker for intermarried groups with greater political embeddedness. Our study presents a nuanced understanding of the benefits and costs of maintaining multiple types of social ties in emerging economies.