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Business transformation in heterogeneous environments: The impact of market development and firm strength on retrenchment and growth reconfiguration
Author(s) -
Chakrabarti Abhirup,
Vidal Elena,
Mitchell Will
Publication year - 2011
Publication title -
global strategy journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.814
H-Index - 24
eISSN - 2042-5805
pISSN - 2042-5791
DOI - 10.1002/gsj.3
Subject(s) - control reconfiguration , divestment , business , industrial organization , retrenchment , dynamism , market economy , economic system , economics , finance , public administration , computer science , political science , embedded system , physics , quantum mechanics
Asset reconfiguration by both growth and divestiture underlies business transformation, but reconfiguration remains poorly understood in countries with limited market infrastructure. We argue that more developed infrastructure facilitates resource reconfiguration, assisting weak firms' attempts to retrench and strong firms' attempts to grow; in turn, market development shapes the impact of reconfiguration by enhancing the benefits of adding assets and limiting the benefits of divestitures. We examine reconfiguration activity by 1,256 firms based in eight South East Asian economies—Hong Kong, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan, and Thailand—from 1990 to 1999. The study contributes to theories of business dynamics in varied settings of market‐based socioeconomic development.