The discourse on the competitiveness of emerging economy firms continues with globalization. This paper joins the dialogue by providing a framework of the competitiveness of business groups and their affiliates in international operations. The goal is to address the vast literature on emerging economies that remains short in providing the theoretical background on the competitiveness of emerging and transitioning economy firms. To do this, this study used a critical review and analysis of the literature. It offers some propositions to illustrate the applicability of the framework in analyzing the international expansion of business group affiliates across borders. Ultimately, the paper contributes to the literature on managerial capabilities and competitiveness of firms to sustain their operations as the new emerging economy multinationals.

The previous studies have focused on weak institutional environment in explaining the growth of business groups in emerging economies. The recent events, however, show that business groups continue to grow even when the institutions are getting better. This is evident both in the domestic and international growth stages. This paper addresses this by providing a group and a firm-level analytical framework as an alternative in examining the international growth of business groups. The focus is putting the institutional environment in the background and the business groups in the forefront. The paper builds on the endogenous growth of business groups and proposes that their persistence, regardless of institutions and level of economy, can be explained not only through their environment but also by the internal dynamics of their organizational structure and group-specific advantages. This proposition is based on the theory of the firm through the combined application of transaction cost economics, resource-based and dynamic capabilities views.

This paper provides a theoretical framework to explain the competitive advantages of business groups and their affiliates. The theory is applicable to the developing economy business groups including those found in the developing economies. The goal is to address the literature on emerging economies which remains short in providing the theoretical background on the nature of different types of emerging economy firms and their competitive advantages. Some theoretical and practical implications are presented to explicate the value of the framework toward our understanding on the growth, behavior and competitiveness of business groups in different economies.

This study views the network of control in a corporate business group as its source of competitive advantages. These control advantages are distributed among the business group affiliates and eventually influence their performance. This paper examines this by providing a reconceptualization of both the nature of business group and affiliate level advantages using the data of the top 20 Philippine corporate groups. The study found out that the group level control advantage affects the affiliate performance more than their individual level advantages. This result confirms the capability of business groups to influence and control their group internal market. This also implies that the business group affiliates have not yet developed significant capabilities which are independent to that of their business group.