¡@¡@By utilizing longitudinal data over 10 years, this research tries to examine the relationships between distinctive political linkages by family members and the diversification implications in family business group in Taiwan. The past researches have highlighted that the political linkages established by family members have significant influence on the family business group¡¦s diversification. However, there is little researches examine who¡¦s political linkage is critical in determining the diversification decision in family business group. From social capital viewpoint, this research tries to investigate the diversification implications of political linkages established by three family roles, i.e., the founder, the sons, and the marriage roles, in family business groups. The results reveal that the founder¡¦s informal political linkages have significantly positive influence on the diversification. Furthermore, the political linkages established by marriage roles do not reveal significant influence on the group¡¦s diversification. However, the son¡¦s political linkages have distinctive influences on the diversification decision. In that, the son¡¦s formal political linkages have significantly negative influence on diversification, but the son¡¦s informal political linkages have significantly positive influence on diversification. The results indicate that the differential roles in family business groups have distinctive influence on the strategy decisions. The results provide insightful theoretical and practical implications in diversification issue and political linkages issues in largely family business groups.

The study aims to analyze the impact of political linkage on diversification strategy and firm performance. Previous studies indicate that firm¡¦s political linkages will generate performance impact in emerging economies. However, whether firm¡¦s political linkages will generate performance implications are underestimated. By utilizing longitudinal data in financial family business groups in Taiwan, this study tries to examine the relationships among political linkages, diversification strategy, and family business group¡¦s performance from the social capital viewpoint. The results indicate that in the current database, the higher level of formal political linkages, the higher degree of diversification in family business groups. Moreover, diversification strategy will generate mediated impact on the relationship between formal political linkages and performance in family business groups. In that, the consideration of diversification will lower the performance implications by formal political linkage in family business groups. The family business group¡¦s formal political linkageswill generate distinctive impact on diversification strategy and performance in emerging economies. The results provide referable value in addressing political linkages issues in family business groups in Asia.