Identifying and Explaining the Influencing Factors in Formation and Development of Heterogeneous Mulbusiness Corporations (Conglomerate)

The purpose of the present study is to provide a theoretical framework for the formation influencing factors in heterogeneous multibusiness corporations and the role of each of these factors in different stages of corporate development. The methodology of the present study is a systematic review, which, according to Cooper, consists of seven stages, namely problem formulation, data gathering of studies, qualitative evaluation of studies, analysis and integration, interpretation of documentation, and presentation of results. Accordingly, 39 articles on unrelated diversification strategies and conglomerates were published between 1965 and 2018 on a scientific basis, extracted and analyzed after the filtering process using manual coding. based on the results of selective articles, 28 indices were divided into three contextual, structural and contentual factors. Four indices were identified for content factors, 15 for structural factors and 9 for contextual factors. Among the contextual indicators, the economies of states, government and institutional factors, among the structural factors indices of risk reduction, finaincial synergy, and central business position, and among the managerial and shareholder behavioral factors were the most frequent ones. In the second stage, the role of each of the factors in the development stages of conglomerate corporate was investigated, which in the early stage of contextual factors, and growth stage, structural factors and in the maturity stage, contentual factors had the most influence.

Diversification strategy is one of the ways to enter into heterogeneous businesses. There has been much study and views about the formation of corporate with related businesses, but any comprehensive model for the formation of unrelated multi-business not been put up yet. THIS study attempts to bridge this gap. Given the complex and unstable environment in most developing countries,especially Iran, many companies are approaching toward this type of developement and most of them often fail. On the other hand, the role of these factors in different stages of the development of corporate is not same, so this study seeks to answer this question.  

The statistical population of the study: All articles on unrelated diversity strategies and conglomerates were published in the scientific database between 1965 and 2018. Theoretical framework Since most research on related and unrelated diversification is related to their performance, value, risk, etc., research has not comprehensively examined the cause of the formation of multifaceted and unrelated corporate. According to the theoretical literature, the reasons for the formation of multi-business corporations can be explained in two dimensions: The first is the economics of countries and base developing countries and the second is based on their purpose of diversification, which purpose is Growth.

The methodology of the present study is a systematic review, which, according to Cooper, consists of seven stages, namely problem formulation, data gathering of studies, qualitative evaluation of studies, analysis and integration, interpretation of documentation, and presentation of results. Accordingly, 39 articles on unrelated diversification strategies and conglomerates were published between 1965 and 2018 on a scientific basis, extracted and analyzed after the filtering process using manual coding.

Based on the results of selected articles, 30 indices were divided into three contextual, structural and contentual factors. These indicators include. Intense competition in domestic markets, weak institutional environment, geographic location, legal constraints, support industries, government support, tax incentives, information asymmetry, external alliances, all of which were underlying factors. Owners' philosophy, managerial motivations, strong employee ethics and organizational culture related to behavioral factors and ultimately strong R&D, surplus funds, financial synergy, risk reduction, current business performance, managerial synergy, economies of scale, strategy Current businesses, timing of entry into unrelated businesses, industry-leading advantages, maturity of pivotal businesses, need for high-tech, territory economics, managerial stability, and high transaction costs. In the second stage, the role of each of the factors in the development stages of conglomerate corporate was investigated, which in the early stage of contextual factors, and growth stage, structural factors and in the maturity stage, behavioral factors had the most influence.

Based on the results of the research, one can find the main cause of the formation of multifaceted and unrelated companies in three behavioral, contextual and structural factors. Among these factors, the role of the underlying factors for the formation of multi-business and unrelated corporations is more important than the others, depending on the conditions of the institutional environment of the countries and the stage of development of their economies. On the other hand, when companies are formed, they later show the role of more structural factors, covered by indicators such as financial and managerial synergies, scale and territory efficiency, and finally, the maturity stage for managers and shareholders to enter the internal market. And related and unrelated externalities that are more important in the form of behavioral factors than others.