ABSTRACT The prevalent organizational form in most emerging marketplaces is business organizations. These groups have typically been seen through a transaction cost economics perspective where they are perceived as reactions to inefficiencies on the market. However, the data to date on what creates a positive business group‐performance romantic relationship in such conditions is not well understood. This study expands the knowledge of business groups by employing the source‐based and institutional theoretical perspectives to look at how organizations acquire resources and capabilities to prosper.
The empirical evidence is based on over 224 business organizations in the growing economy context of China and implies that the majority of the endowed authorities resources do not help business groupings to make a competitive edge. Instead, those business groupings with strategic actions to develop a unique profile of market‐oriented resources and features are most likely to prosper.
For instance, business reference planning that links all systems and techniques of the organizational by leveraging the power of information technology may initially require a complete overhaul of the systems and methods first. Such technology-centric change may be part of a business process anatomist exercise that involves redesigning the business processes to maximize potential and value added, while reducing everything else.
Failure to take action may lead to the business systems and techniques turning outdated and discordant with the changing times. In today’s corporate and business world, where survival of the fittest is the maxim, mergers and acquisitions are commonplace and any merger or acquisition heralds a restructuring exercise invariably. The reasons for such restructuring accompanying mergers and acquisitions are extensive. Reconciling the systems and procedures of the merged organizations to ensure that the new entity has consistency of approach.
Eliminating duplication of work or systems, such as two human resource or financing departments. Incorporating the preferences of the new owners, and more. Joint ventures may necessitate formation of matrix groups also, special task makes, or a fresh subsidiary. Frequently, small and medium range businesses have casual constructions and reporting human relationships, and an ad-hoc design of decision-making.
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When such companies grow and want to raise fresh funds, business capitalists and regulations might demand a more professional setup, with formal written-down policies and structures. A listed company may undertake a restructuring exercise to boost its efficiency and unlock hidden value, and thereby show more profits to attract fresh investors. Bankruptcy may force the business to shed excess flab such as workforce, land, or other resources, sell some business lines to improve cash, and be lean and mean, to attract bail-outs or various other rescue package. Companies may make an effort to restructure out of courtroom to avoid the high costs of a formal bankruptcy.
At times, the restructuring exercise may be the result of the whims and fancies of the owners. For instance, the business may have a fresh owner who would like to stamp his / her personal authority and style onto the business. Reshuffle key personnel and provide capacity to trusted lieutenants. Focus on a clean state and thus exert better control. Preempt any inefficiencies that caused the prior owner to sell-out, and more. With or without ownership change acting as a trigger, company owners may appoint a management advisor to examine the business and suggest macro-level changes, as a regular exercise. Sometimes, restructuring may be a obligated exercise, to conform to some statutory or legal requirements.