Turkish business system and diversification

Abstract

Sönmez (1990: 12) starts his book with the following words on the one hand: "It does not matter whether we are aware of it or not. Approximately 50 families or capital groups have managed Turkey. And the domination of these families has consolidated with every passing year. From economy to politics, from cultural life to the foreign policy, the decisions determining the destiny of 60 million have been decided by these big families or holding companies". On the other hand, Buğra (1994: 187) emphasizes that "the decision to enter into a new area of activity is often taken via suggestions and recommendations of government authorities rather than through an evaluation of market signals". It is obvious that there is an important relationship between governments and businesses. Moreover, as Çolpan, Hikino and Lincoln's book (the Oxford Handbook of Business Groups, 2010) shows, it is important to emphasize that this is not only a case for Turkey but almost for all countries, particularly for developing ones because governments need some specific groups to help them for the growth and sustain it (e.g. Buğra, 1994; Çolpan et al, 2010; Çolpan and Hikino, 2008; Hoskisson, Johnson, Tihanyi and White, 2005; Khanna and Palebu, 2000; Tezel, 1982). Big business groups have undertaken the task of basic developmental actors of modern economic development in successful developing countries (Buğra, 1994; Çolpan et al, 2010; Çolpan and Hikino, 2008). In other words, there are mutual needs between them. In this context, despite the nuances, the holding companies or family holdings in Turkey is assumed under the same conceptual framework with the groups of Spain and South America, business houses of India, chaebol of South Korea, keiretsu of Japan and qiye jituan of China (e.g. Buğra, 1994; Çolpan and Hikino, 2008; Karaevli, 2008; Özkara et al., 2008). The relationship between some giant business groups and governments is an important claim which is often expressed as a necessity to grow and make the achieved growth sustainable (e.g. Buğra, 1994; Schneider, 2010; Tezel, 1982). One of the most important reasons behind the frequent discussion of this claim is the growing interest in diversified business groups, which are frequently seen in developing countries as serious economic actors against developed countries (e.g. Colpan, Hikino and Linkoln, 2010). With diversified business groups that is defined by Colpan and Jones (2016: 69) as "the term business group has been used broadly to encompass quite different organizational forms, including network-type, diversified and pyramidal groups, even if most research has focused on 'diversified' business groups that are active in technologically unrelated businesses", the studies on business groups and developing countries show that it is one of the most common growth options, although Nguyen and Cai, (2016) argue that diversification is a rare event. The diversification strategy, which is the most important growth method of these groups and the popularity of the diversification strategy has also constituted an important field of study (Colpan and Jones, 2016). In this context, while it is often claimed that the main motivations identified in the central countries are valid for the whole world, on the contrary, it is emphasized that cultural and national differences will also lead to differences in this field. This study also predicts that the main drivers will differ in different countries. For this reason, it is claimed that the adoption of the diversification strategy of business groups in Turkey, which has a different class from the central country in terms of the national business systems that Whitley presents, can be based on more political-based reasons than the main sources of motivation in the central literature. This study is tried to examine that, different motivations may be the subject of different political periods and even different groups may follow this strategy for various reasons due to different attitudes towards politics with the emphasis on the diversified business groups classification made by Schneider (2010). Therefore, the largest business groups in Turkey have been identified and six of them have been selected to examine the main sources of the motivation behind the adoption of the diversification strategy in different political periods.