Business groups are an organizational model in which collections of legally independent firms bounded together with formal and informal ties use collaborative arrangements to enhance their collective welfare. Among the different varieties of business groups, diversified business groups that exhibit unrelated product diversification under central control, and often containing chains of publicly listed firms, are the most-studied type in the management literature. The reason is that they challenge two traditionally held assumptions. First, broad and especially unrelated diversification have a negative impact on performance, and thus business groups should focus on a narrow scope of related businesses. Second, such diversification is only sustainable in emerging economies in which market and institutional underdevelopment are more common and where business groups can provide a solution to such imperfections. However, a historical perspective indicates that diversified business groups are a long-lived organizational model and are present in emerging and advanced economies, illustrating how business groups adapt to different market and institutional settings. This evolutionary approach also highlights the importance of going beyond diversification when studying business groups and redirecting studies toward the evolution of the group structure, their internal administrative mechanisms, and other strategic actions beyond diversification such as internationalization.
Article
Business Groups as an Organizational Model
Asli M. Colpan and Alvaro Cuervo-Cazurra
Article
Leader–Member Exchange: A Commentary on Long-Term Staying Power and Future Research Directions
Terri A. Scandura and Kim Gower
In 1975, the phrase “vertical dyad linkage” (VDL) was introduced to begin examining the quality of the roles between the leaders and direct reports, and it was soon discovered that the linkages ranged between high quality and low quality. That linkage progressed into “leader–member exchange” (LMX) in 1982. In essence, research reached a point where it found a continuum of the quality of the relationship between the two members. High-quality relationships put the employees into the leader’s “ingroup,” while low-quality relationships left employees on the outside looking in. It followed that those in the ingroup would have some say in the decision-making, would have easier access to the leader, and would garner more respect and “liking.”
Researchers have used the LMX-7 to examine how the quality of superior/subordinate relationships affects individual, interpersonal, and organization factors like job satisfaction, communication motives, and organizational identification (as did the original LMX scale). Although the LMX-7 remains one of the most prominent psychometric measures of LMX, researchers still debate whether the construct should be considered unidimensional or multidimensional.
While the intricacies of LMX-7 versus LMX have been argued, and with teams becoming more of an organizational resource, team–member exchange (TMX) was found to be a supported extension of LMX. While at this point TMX is lacking in the volume and pace of research, due to the difficulties of measurement among a group of people who might have a variety of leaders during the process, the existing research has produced some results that are extremely relevant, now and in the future. Examples of what has been found when the team exchange relationship is high include reduced stress, increased psychological empowerment, increased creativity, increased team performance, increased individual performance, increased organizational citizenship behaviors, increased organizational commitment, and increased job satisfaction, just to name a few.
In sum, the investigation into LMX provides a history of the field of LMX and its many iterations and the role it plays in leadership studies. This research includes LMX antecedents, consequences, moderators, mediators, and outcomes, as any field in which over 4,500 papers have been published needs an effective way to highlight the progress and pathways.
