Showing papers on "Corporate group published in 2007"

Business Groups in Emerging Markets: Paragons or Parasites?

Abstract: Diversified business groups, consisting of legally independent firms operating across diverse industries, are ubiquitous in emerging markets. Groups around the world share certain attributes but also vary substantially in structure, ownership, and other dimensions. This paper proposes a business group taxonomy, which is used to formulate hypotheses and present evidence about the reasons for the formation, prevalence, and evolution of groups in different environments. In interpreting the evidence, the authors pay particular attention to two aspects neglected in much of the literature: the circumstances under which groups emerge and the historical evidence on some of the questions addressed by recent studies. They argue that business groups are responses to different economic conditions and that, from a welfare standpoint, they can sometimes be "paragons" and, at other times, "parasites." The authors conclude with an agenda for future research.

Business Groups: An Integrated Model to Focus Future Research

Abstract: Business groups are the primary form of managing large business organizations outside North America. This paper provides a systematic and integrative framework for understanding business groups. We argue that existing theoretical perspectives of business groups pay attention to four critical external contexts, each of which draws from a specific theoretical perspective: market conditions (transaction cost theory), social relationships (relational perspective), political factors (political economy perspective), and external monitoring mechanisms (agency theory). Business groups adapt to these external forces by deploying various internal mechanisms along two key dimensions: one focuses on the distinctive roles of the group affiliates (horizontal connectedness) and the other focuses on coupling and order between the parent firm and its affiliates (vertical linkages). Based on these two dimensions, a typology of business group forms is developed: network (N-form), club (C-form), holding (H-form), and multidivisional (M-form). Utilizing this model we provide research questions which facilitate an improved future research agenda.

Review Paper Business Groups: An Integrated Model to Focus Future Research

Abstract: Business groups are the primary form of managing large business organizations outside North America. This paper provides a systematic and integrative framework for understanding business groups. We argue that existing theoretical perspectives of business groups pay attention to four critical external contexts, each of which draws from a specific theoretical perspective: market conditions (transaction cost theory), social relationships (relational perspective), political factors (political economy perspective), and external monitoring mechanisms (agency theory). Business groups adapt to these external forces by deploying various internal mechanisms along two key dimensions: one focuses on the distinctive roles of the group affiliates (horizontal connectedness) and the other focuses on coupling and order between the parent firm and its affiliates (vertical linkages). Based on these two dimensions, a typology of business group forms is developed: network (N-form), club (C-form), holding (H-form), and multidivisional (M-form). Utilizing this model we provide research questions which facilitate an improved future research agenda.

Innovation in Business Groups

Abstract: Using novel data on European firms, this paper examines the effect of business group affiliation on innovation. We find that business groups foster the scale and novelty of corporate innovation. Group affiliation is particularly important in industries that rely more on external finance and have a higher degree of information asymmetry. We also find that the innovation of affiliates is less sensitive to operating cash flows. We interpret our results as supporting the `bright side` of business group internal capital markets and explain how legal boundaries between group affiliates mitigate the inefficiencies found in internal capital markets of US conglomerates.

Business group affiliation and firm performance in a transition economy: A focus on ownership voids

Abstract: In a transition economy, how does business group affiliation make a difference in firm performance? Under the broad label of institutional voids, what specific voids can business groups fill? This paper addresses these questions by drawing on insights from property rights theory and an institutional perspective. We argue that ownership voids, as a subset of institutional voids, occur due to the lack of unambiguously specified ownership of state assets in transition economies, and that business groups emerge to serve as the direct owners of state-owned enterprises to replace such voids. Based on a sample of 1,119 publicly-listed Chinese companies, we find that the interaction of business group affiliation and state ownership has a significant and positive effect on firm performance. Our findings point to business group’s substitution role in filling ownership voids in China’s transition economy.

Business groups in East Asia: Post-crisis restructuring and new growth

Abstract: Business groups played an important role in the economic development of East Asian countries Yet business groups in East Asia face an uncertain future Following the Asian Crisis, foreign creditors and investors have demanded that business groups have more transparent operations and stronger corporate governance At the same time, as governments in East Asia have loosened trade barriers, business groups have become subject to intense competition in domestic markets This paper argues that business groups can survive or even prosper by taking initiatives in corporate restructuring This paper also highlights some areas for further research on business groups in this region

The Failure of Corporate Law: Fundamental Flaws and Progressive Possibilities

Abstract: "The Failure of Corporate Law" returns corporate law to a system in which the public has a greater say in how firms are governed. Kent Greenfield maintains that the laws controlling firms should be much more protective of the public interest and of the corporation's various stakeholders. Only when the law of corporations is evaluated as a branch of public law - as with constitutional law or environmental law - will it be clear what types of changes can be made in corporate governance to improve the common good. Greenfield proposes changes in corporate governance that would enable corporations to meet the progressive goal of creating wealth for society as a whole rather than merely for shareholders and executives.

Transfer Pricing or Formula Apportionment? Tax-Induced Distortions of Multinationals' Investment and Production Decisions

Abstract: For mitigating the problems of transfer pricing formula apportionment (FA) is discussed intensively. However, FA could even be more harmful than transfer pricing because income shifting would require changing economic decisions instead of just taking advantage of accounting options. We analyze the impact of different international tax allocation regimes on a corporate group's investment and production decisions. We show that FA offsets the advantages of decision decentralization as it reverses the separation of responsibilities. It is not clear whether FA is desirable from a fiscal or an entrepreneurial perspective. The effects of FA compared to transfer pricing depend strongly on the parameter setting under consideration, especially the decision procedure within corporate groups.

Managerial ties, control and deregulation: An investigation of business groups entering the deregulated banking industry in Taiwan

Abstract: This study investigates the determinants of business groups’ entry to the deregulated banking industry in Taiwan, from the perspectives of social capital and agency theory. The principal objective of deregulation is to increase the efficiency of resource utilization by introducing competition. However, the opportunities inherent in deregulation may induce a battle of strengths among interested business groups. Based on secondary data analysis, this study reveals that the managerial ties possessed by key individuals in a business group, and the degree of overlapping investment between the owner-managers, influences the likelihood of whether or not a business group will decide to enter the deregulated banking industry. The results of this study provide a valuable starting point from which to discuss the influence of internal and external personal networks on business strategy during a time of deregulation.

Piercing the Corporate Veil

Abstract: When courts 'pierce the corporate veil', they disregard the separateness of the corporation and hold a shareholder responsible for the corporation's action as if it were the shareholder's own. Although as a general rule the courts are reluctant to allow corporate veil piercing, creditors of an insolvent corporation frequently attempt to hold the shareholders liable when they cannot obtain satisfaction from their debtor. In the United States, in fact, piercing claims constitute the single most litigated area in corporate law.This study clears up some of the mists hanging around the concept of corporate veil piercing. What exactly is corporate veil piercing and in which situations does it occur? What are the legal rules involved? Following a short overview of the applicable law in the six legal systems that are the subject of this study-those of Belgium, the Netherlands, France, Germany, the United Kingdom, and the United States-the author proceeds with a more profound analysis from a functional comparative perspective, starting from particular situations that typically call for shareholder liability for the debts of subsidiary companies.Among the grounds for veil piercing claims the author discusses the following, along with the substantive and procedural law and important cases associated with each in the six jurisdictions covered: undercapitalization; asset stripping; undue continuing of loss-making activities; and dentification or the consideration of the corporate group as an economic unit. In the course of the presentation, a thorough analysis of legal scholarship in the area leads to numerous applications of the various theories and doctrines that can be brought to bear on veil piercing cases. In addition, an in-depth discussion of the international dimension of corporate veil piercing focuses on the question of which laws should govern the liability of a parent corporation for the debts of its subsidiary. Throughout, the author's clear insight into the substantive law of veil piercing sheds light on traditional misconceptions in the conflict of laws on the issue.She also details initiatives undertaken by various international bodies, including the United Nations, the Organization for Economic Cooperation and Development, the European Union, the International Court of Justice, and the International Labour Organization.Dr Vandekerckhove's study is the most comprehensive, far-reaching, and up-to-date study of this important growing area of corporate law practice. As such it will prove of great value to practitioners, judges, and academics in the field, and will prove its worth anywhere in the world where the presence of multinational corporations is felt.

Corporate governance in malaysia: the effect of corporate reforms and state business relation in malaysia

Abstract: The Asian Financial Crisis in 1997 not only introduced the term of corporate governance but also drew attention of the public about the weaknesses of Malaysian corporate governance practice. Afer 1998, Malaysian government decided to adopt corporate reform that could enhance the quality of good corporate management practice. This reform is clearly stated in the code and rules of corporate governance. The purpose of this research is to study the significance of implementing the code and rules of corporate governance since the public already realize the close relationship between business and politics. Three companies were chosen as indicators for this study. As a result, it was found that companies which are involved in corporate malpractice but have good relationship with states will always be excluded from the legal corporate action.

The Failure of Corporate Law

Abstract: When used in conjunction with corporations, the term “public” is misleading. Anyone can purchase shares of stock, but public corporations themselves are uninhibited by a sense of societal obligation or strict public oversight. In fact, managers of most large firms are prohibited by law from taking into account the interests of the public in decision making, if doing so hurts shareholders. But this has not always been the case, as until the beginning of the twentieth century, public corporations were deemed to have important civic responsibilities. With The Failure of Corporate Law, Kent Greenfield hopes to return corporate law to a system in which the public has a greater say in how firms are governed. Greenfield maintains that the laws controlling firms should be much more protective of the public interest and of the corporation’s various stakeholders, such as employees. Only when the law of corporations is evaluated as a branch of public law—as with constitutional law or environmental law—will it be clear what types of changes can be made in corporate governance to improve the common good. Greenfield proposes changes in corporate governance that would enable corporations to meet the progressive goal of creating wealth for society as a whole rather than merely for shareholders and executives.

Representing Corporate Culture in China: Official, Academic and Corporate Perspectives

Abstract: This paper examines the reasons for the explosion of interest in corporate culture (qiye wenhua) in China over the past decade. It begins by surveying non-Chinese definitions of corporate culture, and then proceeds to introduce the “official” Chinese representation of corporate culture: how the Chinese government has co-opted this foreign concept, promoted it among Chinese corporations, and in the process redefined corporate culture to make it a vehicle for the government’s own policy priorities. “Academic” representations are then introduced, in other words Chinese academic texts, which in some cases explain and justify the official view of corporate culture and in other cases strongly reject it. Finally, the paper illustrates how five large Chinese corporations publicly represent their cultures, and how they comply with the official requirements for corporate culture — at least on the surface — even when there is no direct legal obligation on them to do so. The paper concludes that the corporate culture phenomenon in China is evidence of a pragmatic process of adaptation and accommodation by various corporate stakeholders, including the CCP, corporate managers and employees, and reveals a uniquely Chinese idea of the business corporation, as a hybrid economic-political-cultural organization dedicated to national and individual improvement and renewal.

Convergence in Shareholder Law

Abstract: This paper contains the tables of contents, legislation and cases, the introduction and the index of a book published by Cambridge University Press (2008). The cover text reads as follows: "On the one hand, it can be argued that the increasing economic and political interdependence of countries has led to the convergence of national legal systems. On the other hand, advocates of the counterhypothesis maintain that this development is both unrealistic and unnecessary. Mathias Siems examines the company law of the UK, the USA, Germany, France, Japan and China to see how this issue affects shareholder law. The author subsequently analyses economic and political factors which may or may not lead to convergence, and assesses the extent of this development. Thus, Convergence in Shareholder Law not only provides a thorough comparative legal analysis but also shows how company law interconnects with political forces and economic development and helps in evaluating whether harmonisation and shareholder protection should be enhanced".

Strategy formulation and implementation at AAR group of companies

Abstract: For a firm to survive and prosper, a strategy is important. Strategy helps a firm create a fit between the organization and its environment in an effort to enable the organization adapt to its turbulent environment. How the strategy is planned, formulated and implemented is therefore important. Strategy is the direction and scope of the organization over the long term, which enables it to achieve advantage through configuration of its resources within the changing environment, to meet the needs of markets and fulfill the expectations of the stakeholders. An organization’s strategy deals with the game plan for moving the company into an attractive business position and building a sustainable competitive advantage. A company’s actual strategy usually turns out to be more or less than the planned strategy as new strategy features are added and others are deleted in response to newly emerging environmental conditions. This study was about the strategy formulation and implementation process at AAR group of companies. The group was started in the year 1984 and operated in a relatively stable environment for 15 years up to year 1999 when adverse environmental challenges started emerging. By year 2003, the environmental factors had become severe and the group realized that it had to review its strategy if it was to survive. The objective of the study was to document the process that AAR group undertook in formulating and implementing the strategy. The study further sought to interrogate any challenges encountered in that process. The study was conducted as a case study by carrying out in-depth interviews with the Chief Executive Officer, The Managing director, five (5) Senior Managers, five (5) middle level managers and ten (10) employees at lower support level. The findings confirmed that the group formulated strategy and has continued to implement those strategies. This study established that key to strategy formulation at AAR Group was a clear identification and formulation of the organizations Vision, Mission, Core Values and

Interlocking Directorates and Business Groups: Belgian Evidence

Abstract: We investigate the determinants of interlocking directorates and their impact on company performance for a Belgian sample of 286 companies affiliated with a business group and 2,136 stand-alone companies. Most of these companies are not listed. We find that companies belonging to a group have much more interlocking directorates than stand-alone companies. Group companies tend to be strongly interlocked with other group members, including parent companies, and they have more intra-group interlocks when they are located at a higher hierarchical group level. Group companies have more vertical interlocks when they are involved in an internal capital market and when they are affiliated with a diversified business group. We also find that while interlocking directorates are negatively related to the profitability of standalone companies, they do not affect the profitability of group companies. This suggests that directors in Belgian business groups are not “too busy”, and that intra-group interlocks are not facilitators of expropriation by controlling shareholders.

Corporate Taxation and International Charter Competition

Abstract: Corporate Charter competition has become an increasingly international phenomenon. The thesis of this article is that this development in the corporate law requires a greater focus on the corporate tax law. We first demonstrate how a tax system's capacity to distort the international charter market depends both upon its approach to determining corporate location and the extent to which it taxes foreign source corporate profits. We also show, however, that it is not possible to remove all distortions through modifications to the tax system alone. We present instead two alternative methods for preserving an international charter market. The first best solution involves severing the markets for corporate law and corporate tax law through coordination of locational rules under each regime, with a "place of incorporation" rule for corporate law and a "real seat" rule for corporate tax. The second best solution relies on a properly designed federal structure. The crucial design elements for such a federal system are the allocation of substantive law between the federal and subfederal levels, corporate and corporate tax locational rules, and the taxation of corporate migration and foreign source corporate profits. With due attention to these details, an international charter market can be protected from the potentially distorting effects of corporate taxation, but only if considerable care is taken. In the final part of the paper we apply our analysis to the United States, Canada, the European Union, and Israel, and show how difficult it is, in the real world, to separate corporate charter and corporate tax competition.

Governance strategy : a property right approach turning governance into action

Abstract: Corporate governance (CG) needs to acknowledge the intentional part of governance, where an actor of governance uses the set of corporate governance mechanisms in order to influence the agent to create a performance that will satisfy the interest of the principal. This paper offers a conception of this activity through the concept of governance strategy. The concept is based on a property right approach and derived within the context of agency theory, stressing the interest and the capacity of the principal. It is applied to two empirical organisations seldom investigated in CG research: the organisation of multinational corporations in a business group and the organisation of a riding school in a democratic not-for-profit association, thereby extending the relevance of the concept from corporate governance to organizational governance. The empirical analysis indicates the relevance of the conception and suggests further extension through hypotheses of governance strategy related to environmental influence, accessibility of governance mechanisms and momentum of mechanisms.

Diversification and Firm Performance: The Moderating Influence of Ownership Structure and Business Group-Affiliation

Abstract: Investigations into the relationship between corporate diversification and firm performance represent one of the most actively investigated areas in the fields of strategy and finance. However, despite the enormous interest in the field, the debate on whether corporate diversification creates or destroys value remains inconclusive with several studies offering differing results on the phenomena among different institutional contexts. Moreover, much of the earlier empirical research has exclusively focused on merely examining the influence of various diversification measures on firm performance. This study examines the diversification-performance relationship by extending these prior studies by explicitly analyzing the impact of ownership structure and business group-affiliation in influencing this relationship. These differences in ownership structure and business group-affiliation have generally been ignored by much of the prior research in this area. Utilizing the theoretical underpinnings of agency and resource-based perspectives, hypotheses are formulated which postulate a differential influence of the impact of corporate diversification on firm performance depending on the firms ownership structure and group-affiliation. In a nutshell, the paper attempts to bring together two broad literature streams: one examining corporate governance characteristics such as ownership structure and business group affiliation; and second examining diversification-performance issues with the overall objective of attaining a more composite understanding of a strategic decision of vital import, namely corporate diversification. INTRODUCTION Research on the relationship between corporate diversification and firm performance has a long history, which goes back by some four decades. Beginning with the pioneering work of Rumelt (1974), numerous researchers have attempted to examine the issue. Yet, despite this close scrutiny, the debate on whether corporate diversification creates or destroys value remains inconclusive with numerous studies offering differing results on the phenomena among different institutional contexts. Surveys by Palich et al. (2000) and Martih and Sayrak (2003), examining the phenomenon from the strategy and finance perspectives, attest to the wide ranging and continuing interest in the subject. While much of the earlier empirical research has exclusively focused on merely examining the influence of various diversification measures on firm performance, this study attempts a departure from the standard norm. Taking cue from suggestions advocated way back by Chandler (1962) and more recently by Dess et al. (1995), the study examines the diversification-performance relationship by explicidy analyzing the impact of ownership structure and business group-affiliation in influencing this relationship. These differences in organizational form (as represented by group-affiliation) and ownership structure have generally been ignored by much of the prior research in this area. This paper attempts to address this lacuna and to make a contribution to the literature in the field in view of the relative paucity of studies that have examined this issue especially in an emerging economy context such as India. Specifically, this paper throws light on how and why the firms' ownership structure ard business group-affiliation (which is a widely prevalent organizational form arid in many developed and emerging markets) influences the diversificationperformance relationship. Since this study is based in an emerging economy setting concerning a sample of firms from India, organizational characteristics such as business groups and the effects of family shareholdings on the firm's strategic choices and their consequent effects on performance hold particular relevance. The remainder of the paper examines the theory underpinning the reasons why firm diversify, their performance implications and specific hypotheses concerning the impact of firm diversification on performance and the moderating impact of group-affiliation and ownership are developed. …

Allocating Liability in Corporate Groups: An Australian Perspective

Abstract: This is a revised version of a paper presented at the University of Connecticut. The theme of the conference was corporate groups and the conference was held in honor of Professor Philip Blumberg who is the author of the 7 volume treatise on the Law of Corporate Groups. The article is in four main parts. First, the author provides statistics on corporate groups in Australia. Second, there is discussion of reasons for the development of corporate groups. Third, the different approaches to the regulation of corporate groups in Australia are discussed. The article concludes with discussion of whether, and in what circumstances, holding (or parent) companies should be liable for the debts of insolvent subsidiaries.

Blumberg on corporate groups

Abstract: This Book provides a comprehensive treatment of corporate groups and the legal interrelationships of their component parent, subsidiary, and affiliated companies. It offers in-depth coverage of statutory and judicial law, federal and state, that affects parent and subsidiaries, franchisers and franchisees, licensors and licensees, health care institutions and medical staff and other corporate groups and provides the only comprehensive coverage of the key question: when the law will use more modern tools of enterprise law and look to the whole multicorporation enterprise, and when will it use traditional tools and look to individual corporate entities?Traditional corporation law and "piercing the veil" no longer provide adequate guides to the law of parent and subsidiary corporations. In numerous areas, courts and legislatures are today allocating legal rights and liabilities according to modern enterprise principles.

Innovation in Business Groups

Abstract: Using novel data on European firms, this paper examines the effect of business group affiliation on innovation. We find that business groups foster the scale and novelty of corporate innovation. Group affiliation is particularly important in industries that rely more on external finance and have a higher degree of information asymmetry. We also find that the innovation of affiliates is less sensitive to operating cash flows. We interpret our results as supporting the "bright side" of business group internal capital markets and explain how legal boundaries between group affiliates mitigate the inefficiencies found in internal capital markets of US conglomerates.

Corporations Without Labor: The Politics of Progressive Corporate Law

Abstract: This article examines how, in the course of the twentieth century, legal scholars and political theorists helped remove the interests of workers (as differentiated from shareholders, officers, and directors) from the core concerns of corporate law and theory. Specifically, the article demonstrates how scholars' conversations about corporate entities and corporate power were influenced by a shared cultural and intellectual objection to Marxist class analysis with its focus on the proletariat. It further explores how the purging of the working class from the scholarly imagination paved a way, first, for the rise of the new classes of managers and owners and the shareholder-centered vision of corporate law and, then, for the emergence of a narrow, shareholder-wealth-maximization norm. The article uses class as a category of analysis to interpret major events in the history of corporate law: the debate about the personality of associations in the 1910s and 1920s, the publication of The Modern Corporation and Private Property, the debate between Adolf A. Berle, Jr. and E. Merrick Dodd, Jr. about the nature and scope of managerial duties, the rise of managerialism, and the ascent of the economic theory of the firm in the 1980s.

Business groups and internal capital markets: the recovery of the Mexican economy in the aftermath of the 1995 crisis

Abstract: In the second half of the nineties, the Mexican economy experienced a severe financial crisis. However, as the initial panic subsided, Mexico started to show promising signals of macroeconomic recovery. Not only did the economy rebound within a year but also grew steadily afterward, averaging an annual rate slightly above 5% during 1996–2000. In this article, it is suggested that the business group structure helped in the recovery of the economy. The collapse of the banking system, and the interruption of financing flows through the domestic financial markets, was overcome by a change in the firms’ capital structure. Firms, when possible, started to depend more on trade credit, and the internal capital market of business groups created a financial cushion that kept the economy working. In order to offer a rationale for the Mexican experience, a theoretical model is presented where it is shown that moral hazard problems are reduced within a business group as long as affiliated firms in the nontradable sector surrender control rights during periods of crisis. Copyright 2007 , Oxford University Press.

Parenting Advantage in Business Groups of Emerging Markets

Abstract: The concept of parenting was originally proposed by Campbell et al (1995) in the context of conglomerates in developed economies. In contrast to the divisional structure of conglomerates in developed countries, business groups as found in most emerging consist of a network of affiliated yet independent firms. This difference in the structure of multi-business firms in developed and emerging markets solicits a revisiting the concept of parenting as originally proposed by Campbell et al. (1995). Does ‘parenting advantage’ exist in emerging markets? If so, what are the sources of ‘parenting advantage’? Given the multi-firm, multi-business group affiliated setup how does ‘parenting’ differ in emerging markets when compared to conglomerates of developed economies? How does the business group structure and associated managerial practices impact ‘parenting advantage’ of firms affiliated to a business group in emerging market? This paper examines some of these critical yet unanswered questions. The contribution m...

Corporate responsibility in international law: which way to go

Abstract: The debates about the relationship between human rights and business are voluminous. Many scholars argue for direct corporate responsibility in international law and seek to find ways to attribute such responsibility to corporations without the consent or practice of States. This has proved very problematic. Other scholars dismiss calls for direct corporate responsibility stating reasons such as State sovereignty, lack of personality and difficulties with notions of ‘corporate’ as opposed to ‘individual’ or ‘state’ responsibility. All these scholars work on the assumption, that the determination of whether corporate responsibility should be direct or not in international law, can be based on acts or practices outside State consent or practice. This article will argue that for corporations to be held responsible under international law, the way forward is to consider how States can be convinced to reach agreements which directly impose responsibility on corporations. After all, international law is State-structured, and perhaps rightly so.

Growth and Persistence of Large Business Groups in India

Abstract: The international business literature is belatedly recognizing the significance of large family-controlled business groups in emerging markets. Most research has focused on analyzing the impact of concentrations of private wealth on economic development in home countries using panel data. This paper examines the growth and persistence of business groups since 1951 in one country – India. Since Independence, the government has attempted to operate an economic policy framework that had, amongst its prime objectives, the curbing of the tendency of business groups to concentrate economic power. As their growth was seen as synonymous with concentration of wealth, business groups became obvious candidates for regulation. Various policy instruments were introduced, such as the Industries (Development and Regulation) (IDR) Act 1951 and the Monopolies and Restrictive Trade Practices (MRTP) Act 1969, with the aim of erecting barriers to their growth. In 1991, economic reform ushered in the removal of the legislative barriers to business group growth. The analysis in this paper concludes that large business groups expanded their share of wealth between 1951 and 1969, but this growth was arrested between 1970 and 1990, and since 1991, it has dwindled. The pre-eminent position of Tata and Birla, as the two largest business groups, remained unchallenged from 1951 until the emergence of the Reliance Group in the late 1990s. However, there has been frequent change in the relative positions of other groups in and out of the Top-20. After economic liberalisation accelerated from 1991, there was significant change in the ranks of business groups in the Top-20. Existing smaller groups or newly emerging groups, particularly in the IT and telecommunications sectors, have replaced many of the previously dominant older groups. This is interpreted as indicating the central role of entrepreneurship in combination with technological innovation, and the opening up of the Indian economy to international competition, in disturbing established business hierarchies in India. More generally, policy intervention appears to have been less effective in breaking up concentrations of economic power in India than economic liberalization and increased competition.