In this paper, we consider the potential paths of Business Group's (BGs) evolution. We organize our analysis around the two dominant perspectives on BGs: institutional voids (IV) and entrenchment/exploitation (EE). We suggest that the empirical evidence does not entirely support either perspective, and neither fully predicts what we sometimes observe; namely that BGs not only persist and thrive, but also sometimes do so as internationally competitive firms. This indicates that a more contextualized approach is required, and we propose a conceptual framework that can guide future thinking. In so doing, we take explicit account of two key factors relevant to the dynamics of BG evolution: the state's capacity to create market-supporting institutions and the ability of business groups to adapt to evolving institutions. Our framework accommodates the possibility of multiple outcomes, including ones consistent with the IV and EE perspectives, but also ones consistent with the internationalization of BGs, including those from emerging markets.