Some of the world’s most profitable and fastest-growing business groups are based in East and Southeast Asia’s newly industrialized and emerging economies—Hong Kong, Singapore, Korea, Taiwan, China, Indonesia, Malaysia, Thailand, and the Philippines. Several, such as Indonesia’s Salim Group and the Hong Kong-focused Swire and Jardine groups, have reached a size that would rank them among the Fortune 500; others, such as Sime Darby from Malaysia, are moving close (see Exhibit 1). Even though a few have faltered in recent years, the majority have profitability levels outstripping those of many companies in the United States, Europe, and Japan. They also have healthy balance sheets and cashflow, and are capable of financing much of their own expansion.

The strategies and organizational approaches that have made these groups so successful in the past, however, will not necessarily serve them well in the future, as they pursue further growth and diversification. They are entering an era of more open and demanding Asian markets—an era that will severely test their established business formulas. Some groups have the potential—certainly, most have the resources—to reshape themselves for this new environment, so that they can continue...