Home   >   CSC-OpenAccess Library   >    Manuscript Information
The Economic Boundaries of Affiliated-group Firms According to The Credit Rating Agencies’ Perspective
Simone Ambroselli
Pages - 71 - 91     |    Revised - 31-05-2023     |    Published - 30-06-2023
Volume - 14   Issue - 2    |    Publication Date - June 2023  Table of Contents
Business Group, Firm Boundaries, Case Study Research, CRAs.
Different management literature streams concerning Multinational Corporations (MNCs) have widely recognized the concept of foreign subsidiary autonomy as a focal point of research, while very few contributions have investigated the economic boundaries of affiliated-group entities in evaluating their level of autonomy especially from a practical point of view. This research investigates the behaviours of Credit Rating Agencies (CRAs) experts who face daily analysis of companies and business groups answering the following research question: How do CRAs’ experts determine the economic boundaries of the legal entities belonging to a business group? An exploratory multiple case study has been conducted on the basis of multiple data sources, literature findings, two rounds of semi-structured interviews, and publicly available documents. Findings suggest that the business group dimension plays a crucial role in defining the economic boundaries of the legal entities and as an intermediate area of research emerges between the legal entity dimension and the group itself. Furthermore, substantive aspects prevail over the formal ones and multi-business operativity, role of the subsidiaries and group governance result as the main drivers in defining these boundaries.
Almeida, H. V., and Wolfenzon, D. (2006). "A theory of pyramidal ownership and family business groups". The journal of finance, 61(6), 2637-2680.
Amatori, F. (1997). "Growth via politics: business groups Italian style". Beyond the firm: Business groups in international and historical perspective, (2), 109.
Ambos, B., Asakawa, K., and Ambos, T. C. (2011). "A dynamic perspective on subsidiary autonomy". Global Strategy Journal, 1(3-4), 301-316.
Ambos, T.C., Andersson, U., and Birkinshaw, J. (2010). "What are the consequences of initiative-taking in multinational subsidiaries?" Journal of International Business Studies 41(7), 1099-1118.
Ambroselli S. (2021). "Subsidiary Decision-making Autonomy: A Systematic Literature Review of The Determinants." International Journal of Business Research and Management (IJBRM), 12.4 (2021): 205-249.
Ambroselli S. (2022). "Autonomy Within Business Groups: A Meso Perspective for Evaluating Intra-group Interlocks (IgI) and Internal Flows". International Journal of Business Research and Management (IJBRM), 13(3), 110-130.
Amsden, A. H. and Hikino, T. (1994). "Project execution capability, organizational know-how and conglomerate corporate growth in late industrialization". Industrial and corporate change, 3(1), 111-147.
Andersson, U. and Forsgren, M. (1996). "Subsidiary embeddedness and control in the multinational corporation". International business review, 5(5), 487-508.
Bartlett, C.A. and Ghoshal, S. (1986). "Tap your subsidiaries for global reach". Harvard Business Review, 64(6), 87-94.
Biancone, P., Secinaro, S. and Brescia V. "Employing Value Chain Theory To Address COVID-19 Outbreak In Tourism Management: A Resilience and Stakeholder View". International Journal of Business Research and Management (IJBRM), 11(3), 39-64.
Birkinshaw, J. (1997). "Entrepreneurship in multinational corporations: The characteristics of subsidiary initiatives". Strategic Management Journal, 18(3), 207-229.
Birkinshaw, J. and Hood, N. (1998). "Multinational Subsidiary Evolution: Capability and Charter Change in Foreign-Owned Subsidiary Companies". The Academy of Management Review, 23(4), 773-795.
Birkinshaw, J.M. and Morrison, A.J. (1995). "Configurations of Strategy and Structure in Subsidiaries of Multinational Corporations". Journal of International Business Studies, 26(4), 729-753.
Boyd, B. K., and Hoskisson, R. E., 2010. "Corporate governance of business groups. The Oxford handbook of business groups". Oxford University Press.
Brouthers, K. D., and Hennart, J. F. (2007). "Boundaries of the firm: Insights from international entry mode research". Journal of management, 33(3), 395-425.
Cainelli, G., and Iacobucci, D. (2011). "Business groups and the boundaries of the firm". Management Decision, 49(9), 1549-1573.
Cavanagh A., Freeman S., Kalfadellis P. and Herbert K. (2017). "Assigned versus assumed: Towards a contemporary, detailed understanding of subsidiary autonomy". International Business Review Review, 26(6) 1168-1183.
Cerruti, C., Mena, C., Skipworth, H., and Tavoletti, E. (2016). Characterizing agile supply partnerships in the fashion industry. International Journal of Operations and Production Management, 36(8), 923-947.
Colli A. and Colpan A. M. (2016). Business Groups and Corporate Governance: Review, Synthesis, and Extension. Corporate Governance: An International Review, 24(3), 274-302.
Cristofaro M., Giardino P.L., Leoni L., (2021), "Back to the Future: A Review and Editorial Agenda of the International Journal of Business Research and Management", International Journal of Business Research and Management (IJBRM), 12(1), 16-33.
Cuervo-Cazurra A. (2006). "Business groups and their types". Asia Pacific Journal of Management, 23(4), 419-437.
de Jong, G. and Dut, V.V. (2010). "The impact of the institutional environment on the autonomy of MNCs' subsidiaries". Problems and Perspectives in Management, 8(2), 53-63.
Denzin, N. K. (2017). The research act: A theoretical introduction to sociological methods. Transaction publishers.
Di Carlo, E., Fortuna, F., and Testarmata, S. (2016). "Boundaries of the business model within business groups". Journal of Management & Governance, 20(2), 321-362.
Dörrenbächer, C. and Gammelgaard J. (2016). "Subsidiary Initiative Taking in Multinational Corporations: The Relationship Between Power". Organization Studies, 37(9), 1249-1270.
Eisenhardt, K. M. (1989). "Building theories from case study research". Academy of management review, 14(4), 532-550.
Eisenhardt, K. M., and Graebner, M. E. (2007). "Theory building from cases: Opportunities and challenges". Academy of management journal, 50(1), 25-32.
Fattobene, L., Caiffa, M., and Di Carlo, E. (2018). "Interlocking directorship across Italian listed companies: evidence from a natural experiment". Journal of Management and Governance, 22(2), 393-425.
Gammelgaard, J., McDonald, F., Stephan, A., Tüselmann, H., and Dörrenbächer, C. (2012). "The impact of increases in subsidiary autonomy and network relationships on performance". International Business Review, 21(6), 1158-1172.
Garnier, G. H. (1982). "Context and decision making autonomy in the foreign affiliates of US multinational corporations". Academy of Management Journal, 25(4), 893-908.
Gates, S. R. and Egelhoff, W. G. (1986). "Centralization in Headquarters-Subsidiary Relationships". Journal of International Business Studies, 17(2), 71-92.
Ghemawat, P., and Khanna, T. (1998). "The nature of diversified business groups: A research design and two case studies". The Journal of Industrial Economics, 46(1), 35-61.
Granovetter, M. (1995). "Coase revisited: Business groups in the modern economy". Industrial and corporate change, 4(1), 93-130.
Guillén M. F. (2000). "Business Groups in Emerging Economies: A Resource-Based View". The Academy of Management Journal, 43(3), 362-380.
Hedlund, G. (1980). "Autonomy of subsidiaries and formalization of headquarters-subsidiary relationships in Swedish MNC's". Strategic Management Journal, 1(1), 23-36.
Hedlund, G. (1981). Autonomy of Subsidiaries and Formalization of Headquarters-Subsidiary Relationships in Swedish MNCs. In Otterbeck, L., The Headquarters-Subsidiary Relationship in Multinational Corporations. Aldershot: Gower.
International Accounting Standard Board, 2009. IAS 24, related party transaction. http://www.ifrs.org.
International Financial Reporting Standard, 2012. IFRS 10, consolidated financial statements. http://www.ifrs.org.
International Financial Reporting Standard, 2013. IFRS 8, operating segments. http://www.ifrs.org.
Jarillo, J.C. and Martínez, J.I. (1990). "Different roles for subsidiaries: The case of multinational corporations in Spain". Strategic Management Journal, 11(7), 501-512.
Khanna, T., and Yafeh, Y. (2007). "Business groups in emerging markets: Paragons or parasites?". Journal of Economic literature, 45(2), 331-372.
Kobrin, S. J. (1991). "An empirical analysis of the determinants of global integration". Strategic Management Journal, 12(S1), 17-31.
La Porta, R., Lopez-de-Silanes, F., and Shleifer, A. (1999). "Corporate ownership around the world". The journal of finance, 54(2), 471-517.
Maher C., and Czarczyńska, A. (2022). "NGOs Collaboration Strategies during the Covid-19 Pandemic First Lockdown: Poland and the United Kingdom". International Journal of Business Research and Management (IJBRM), 13(1), 28-42.
Maman, D. (1999). "Research Note: interlocking Ties within business groups in Israel—A longitudinal analysis, 1974-1987". Organization studies, 20(2), 323-339.
Manolopoulos, D. (2006). "The Concept of autonomy in the subsidiary management research: A conceptual investigation". Journal of Transnational Management, 11(4), 45-62.
McDonald F., Warhurst S. and Allen, M. (2008). "Autonomy, Embeddedness, and the Performance of Foreign Owned Subsidiaries". Multinational Business Review, 16(3), 73-92.
Miles, M. B. and Huberman, A. M. (1994). Qualitative data analysis: An expanded sourcebook. Sage.
Miozzo, M. and Yamin, M. (2012). "Institutional and Sectoral Determinants of Headquarters-subsidiary Relationships: A Study of UK Service Multinationals in China, Korea, Brazil and Argentina". Long Range Planning, 45(1), 16-40.
Mizruchi, M. S. (1996). "What do interlocks do? An analysis, critique, and assessment of research on interlocking directorates". Annual review of sociology, 22(1), 271-298.
Morck, R. (2009). "The riddle of the great pyramids". National Bureau of Economic Research.
Morck, R., Wolfenzon, D., and Yeung, B. (2005). "Corporate governance, economic entrenchment, and growth". Journal of economic literature, 43(3), 655-720.
Mudambi, R., Pedersen, T., and Andersson, U. (2014). "How subsidiaries gain power in multinational corporations". Journal of World Business, 49(1), 101-113.
O'Dwyer, B. (2002). Managerial perceptions of corporate social disclosure. Accounting, Auditing & Accountability Journal, 15(3), 406-436.
Paterson, S. and Brock, D. (2002). "The Development of Subsidiary- Management Research: Review and Theoretical Analysis". International Business Review, 11(2), 139-163.
Patton, M. Q. (1990). Qualitative evaluation and research methods. SAGE Publications, inc.
Piekkari, R., Welch, C., and Paavilainen, E. (2009). "The case study as disciplinary convention: evidence from international business journals". Organizational research methods, 12(3), 567-589.
Raziq M. M., Borini F. M. and Perry M. (2014). "Subsidiary initiatives and subsidiary autonomy: Evidence from New Zealand and Brazil". International Entrepreneurship and Management Journal, 10(3), 589-605.
Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies.
Riner, R. D. (1981). "The supranational network of boards of directors". Current Anthropology, 22(2).
Rommens, A., Cuyvers, L., and Deloof, M. (2007). "Interlocking directorates and business groups: Belgian evidence". University of Antwerp, Faculty of Applied Economics, Department of Accounting and Finance.
Saldaña, J. (2016). The coding manual for qualitative researchers. Third edition. Thousand Oaks, California: Sage Publications
Smångs, M. (2006). "The nature of the business group: A social network perspective". Organization, 13(6), 889-909.
Stake, R. E. (1995). The art of case study research. sage.
Taggart, J. H. and Hood, N. (1999). "Determinants of autonomy in multinational corporation subsidiaries". European Management Journal, 17(2), 226-236.
White, R.E. and Poynter, T.A. (1984). "Strategies for foreign owned subsidiaries in Canada". Business Quarterly, 49(2), 59-69.
Yin, R. K. (2018). Case study research and applications: design and methods. Sixth edition. Thousand Oaks, California: Sage Publications.
Young, S. and Tavares, A. (2004). "Centralisation and Autonomy: Back to the Future". International Business Review, 13(2), 215-237.
Dr. Simone Ambroselli
Istat Italian National Institute of Statistics Rome, 00184 - Italy

View all special issues >>