Politics, institutions, and diversified business groups comparisons across developed countries

Abstract

This chapter examines the effects of national level politics and institutions on the long-term evolution of diversified business groups. A central goal of this chapter is to connect the analysis of business groups to broader debates on the political economy of advanced capitalism, especially varieties of capitalism, power resource theory, legal families, and entrenchment. States (through regulations) and firms (via their corporate practices, especially concentrated ownership and cross-ownership) across much of continental Europe and Japan protected business groups by forestalling takeovers, while capital markets in liberal economies encouraged the formation of new kinds of business groups (especially private equity) by facilitating takeovers. Brief summaries of the evolution of business groups over the past century in Sweden and the United States illustrate these different dynamics in coordinated and liberal economies.