The future of business groups in emerging markets: Long-run evidence from Chile

We demonstrate variation in the extent to which firms benefited from their affiliation with Chilean business groups in the 1988-96 period. The net benefits of unrelated diversification were positive if group diversification exceeded a threshold level, though this threshold increased with time. Sizable group benefits unrelated to diversification also existed, but they atrophied over time. We conjecture that the evolution of institutional context alters the value-creating potential of business groups, albeit slowly.