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Abstract
This article examines the emergence and development of what became the largest business group in Turkey, the Koç Group. This venture was an important actor in the emergence of modern business enterprise in the new state of the Republic of Turkey from the 1920s. After World War II it diversified rapidly, forming part of a cluster of business groups which dominated the Turkish economy alongside state-owned firms. This article examines how the founder of the Group, Vehbi Koç, formulated his business model, and analyses how his firm evolved into a diversified business group. Although the case supports prevailing explanations of business groups related to institutional voids, government policy and the importance of contact capabilities, this study builds on and extends the earlier suggestions that entrepreneurship needs incorporating as an explanatory factor. The article shows that Koç acts as both a Kirznerian and Schumpeterian entrepreneur to build his group, both in its formative stages and later in its subsequent growth into a diversified business group.
Acknowledgements
We would like to thank Behlül Üsdiken and Şevket Pamuk, and the participants of the EBHA conference in Uppsala as well as the two anonymous referees for their invaluable comments and suggestions.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1. Colpan, Takashi, and Lincoln, The Oxford Handbook.
2. Khanna and Yafeh, “Business Groups.”
3. Schneider, “Business Groups.”
4. Guillén, “Business Groups.”
5. Kock and Guillen, “Strategy,” 93–95, 103–104.
6. Chung, “Beyond Guanxi.”
7. Larsson and Petersson, “Tradition”; Jones, Merchants;Barbero and Jacob, La neuva; Tripathi, The Oxford History.
8. Buğra, State; Colpan, “Business Groups.”
9. The definition of business used here includes self-standing enterprises and business groups including private sector businesses and state owned enterprises, both in manufacturing and agriculture, mining and services.
10. Those largest enterprises were Koç, Sabancı, Ya¸ar, Anadolu Endüstri, Eczacıba¸ı, Çukurova, Akkök and Kutluta¸. Buğra, State, 56.
11. Casson, Yeung, Basu and Wadeson, “Introduction,” and the associated Handbook provides a useful introduction to the rich economics literature on the theory of entrepreneurship, including the well-known theories of Isaac Kirzner and Joseph Schumpeter.
12. Buğra, State;Colpan, “Business Groups”; Ercek, “Exploring.”
13. Kuran, The Long Divergence; Colpan, “Business Groups.”
14. Kuran, The Long Divergence; Artunc, “The Protégé System.”
15. Buğra, State; Kepenek, and Yentürk, Türkiye Ekonomisi; Şahin, Türkiye Ekonomisi. The Capitulations system ended with the Lausanne Agreement in1923.
16. Owen and Pamuk, A History, 10–13.
17. Buğra, State, 114–116; Karademir, Özgen, Osborn, and Yaprak, ”The Co-evolution”; Yerasimos, Azgelismislik; Colpan, “Business Groups”; Owen and Pamuk, A History, 26.
18. Buğra, State.
19. Yilmaz, “4875 Sayili”; Zarakolu, “Yabanci Sermayeyi.”
20. Buğra, State.
21. Jones, Multinationals, ch. 8; Öni¸, “Redemocratization.”
22. Koç, Hayat Hikayem, 11–23.
23. Ibid., 39–42.
24. Ibid.
25. Duruiz, “Ford,” 486; Koç, Hayat Hikayem, 50–51.
26. Duruiz, “Ford,“ 487.
27. Koç, Hayat Hikayem, 38–39; Interview with Hasen Bengü.
28. Ibid., 53, 62.
29. Buğra, State, 77–79.
30. Email from Rahmi M. Koç; Hayat Hikayem, 69–73
31. Brynildssen, International Directory; http://www.biyografi.info/kisi/vehbi-koc
32. Ford Otosan, 50. Yıl Projesi, 9–12, Koç, Hayat Hikayem, 69–74, 81–84.
33. Ford Otosan, 50. Yıl Projesi, 8–12.
34. Koç, Hayat Hikayem, 136–137.
35. Birand, Vehbi Koç; Ford Otosan, 50. Yıl Projesi, 10.
36. Koç, Hayat Hikayem, 129, 132–134.
37. Ibid., 139.
38. Ibid., 139–148.
39. In 1974 he donated through Koç Group companies and the Vehbi Koç Foundation, a total of 10 million TL ($740,000) to the foundations established to support the Armed Forces and Turkish Red Crescent Society. Dündar, Özel Ar¸ivinden, 166–167.
40. Ford Otosan, 50. Yıl Projesi, 11–12.
41. Shapiro, Engines.
42. Tofa¸ interactive history at http://english.tofas.com.tr/Tarihce.aspx, Koç, Hayat Hikayem, 87.
43. Arçelik, Mamulattan Markaya, 41; Koç, Hayat Hikayem, 75.
44. Arçelik, Mamulattan Markaya, 74, 108–109.
45. Interview with Rahmi M. Koç.
46. Nahum, Koç'ta 44 yılım, 263; Kıraç, Anılarımla Patronum, 146; Koç, Hayat Hikayem, 94–95.
47. Nahum, Koç'ta 44 yılım, 265.
48. Email from Rahmi M. Koç; Hayat Hikayem, 96.
49. Email from Rahmi M. Koç; Interview with Rahmi M. Koç.
50. Koç, Hayat Hikayem, 95–96.
51. Kıraç, Anılarımla Patronum, 146; Koç, Hayat Hikayem, 96; Email from Rahmi M. Koç; Interview with Rahmi M. Koç.
52. Email from Rahmi M. Koç.
53. Koç's establishment of a pension fund followed a conversation with the chief executive of Siemens in Germany, who had advised him that the step would make his employees more loyal to their employer. Infini, Dunden Yarina.
54. Shareholding structure of Koç Holding in 1963; Koc Holding Archives; Koc Holding Annual Report, 1970.
55. Koç Holding Annual Report, 1965.
56. Information received from Koç Holding.
57. Karlıklı, “Migros.”
58. Karlıklı, “Migros.”
59. Authors' adaptation from Koç, Hayat Hikayem, 93–94.
60. Koç Holding Annual Report, 1988.
61. Email from Rahmi M. Koç; Interview with Temel Atay.
62. Istanbul Stock Exchange Historical developments at http://www.imkb.gov.tr/25yil/index.html; Capital Markets Board of Turkey at http://www.spk.gov.tr; Celasun and Rodrik, “Turkish Experience.”
63. Balkas, “Kredi Kavrami.”
64. The two managers were Bernar Nahum (responsible for the automotive businesses) and Isak de Eskinazis (responsible for finance.).Can Kirac website at http://www.cankirac.com/yazidetay.asp?id=177&kat=10; Koç Holding Annual Report, 1965, Koç Holding Archives.
65. This was Hulki Alisbah. He drafted the initial Koç Holding project and became especially influential in financial and legal matters during the initial establishment process.
66. Interview with Rahmi M. Koc; Koç Holding Annual Report, 1965, Koç Holding Archives.
67. Nahum, Koç'ta 44 yılım; Email from Rahmi M. Koç; Interview with Rahmi M. Koç.
68. Rahmi Koç had a business administration degree from John Hopkins University, and had started working in the business in 1958, when he joined Otokoç.He also became the General Coordinator of the Holding Company (Koç Holding Annual Report, 1965, Koç Holding Archives).
69. Email from Rahmi M. Koç.
70. Interview with Temel Atay; Interview with Rahmi M. Koç.
71. Nahum, Koç'ta 44 yılım, Suna Kıraç, Ömrümden, p.104; Koç Holding Annual Report, 1973, Koç Holding Archives.
72. Koç Holding Annual Report, 1973; Interview with Samim Seren; Beko History at http://www.beko.com.tr/tarihce.html.
73. Email from Rahmi M. Koç; Interview with Rahmi M. Koç; Koç Holding R&D Center Report, Koç Holding Archives.
74. Üsdiken and Çetin, ‘From Betriebswirtschaftslehre’; Kipping, Üsdiken, and Puig, “Imitation”; Email from Rahmi M. Koç.
75. Kıraç, Ömrümden.
76. Kıraç, Ömrümden, 137–8.
77. Bain Report, Koç Holding Archives, December 22 1988.
78. Kıraç, Ömrümden, 144–147.
79. Kıraç, Ömrümden, 146. Turkey entered into the EU customs union in 1996.
80. Colpan, “Business Groups,” 491–495; Colpan, “Business Groups” also shows that Turkish business groups overall are largely diversified being active in twelve 2-digit SIC industries in 2005.
81. Conversation with Selçuk Ya¸ar at Ya¸ar Holding, April 24, 2014.