This study investigates the determinants of business groups’ entry to the deregulated banking industry in Taiwan, from the
perspectives of social capital and agency theory. The principal objective of deregulation is to increase the efficiency of
resource utilization by introducing competition. However, the opportunities inherent in deregulation may induce a battle of
strengths among interested business groups. Based on secondary data analysis, this study reveals that the managerial ties
possessed by key individuals in a business group, and the degree of overlapping investment between the owner-managers, influences
the likelihood of whether or not a business group will decide to enter the deregulated banking industry. The results of this
study provide a valuable starting point from which to discuss the influence of internal and external personal networks on
business strategy during a time of deregulation.
Keywords Business groups - Managerial ties - Social capital - Agency theory
I gratefully appreciate the valuable comments of the reviewers and the discussant in the APJM Special Issue Conference on Conglomerates and Business Groups in Asia-Pacific. I greatly appreciate the sponsorship provided
to this study by the National Science Council, Executive Yuan, Taiwan; under Grant Number: NSC 92-2416-H-214-011, 2003/08/01-2004/07/31.