Over the past two-plus decades, as emerging market economies liberalized, multi-nationals stormed in. Many local companies lost market share or sold off businesses as a result, but some fought back. They held their own against the onslaught, restructured their businesses, exploited new opportunities, and built world-class companies that today are giving their global rivals a run for their money.

Western experts have often urged the breakup of the large, diversified business groups that dominate the private sector in many emerging economies. But a rush to dismantle these groups would be a mistake, say HBS Professors Tarun Khanna and Krishna Palepu. Emerging economies lack a soft infrastructure–the banks, business schools, corporate governance processes, and so on that are the foundation of economic growth. Many business groups in emerging markets make up for the absence or weakness of these market intermediaries by filling in themselves.

Focus is good advice in New York or London, but something important gets lost in translation when that advice is given to groups in emerging markets. Western companies take for granted a range of institutions that support their business activities, but many of these institutions are absent in other regions of the world.