This paper examines how large business groups may effectively extend their control influence over their subcontractors that lie outside the groups’ equity ownership boundaries. Using a unique dataset on 1,968 subcontractors of 34 largest Korean family business groups in the post-2000 period, we show that the profit rates of subcontractors of a business group are similar to one another than they are to the profit rates of their industry peers. Further analysis reveals that these subcontractors engage in a more than conventional customer-supplier relationship with the large business group such that central members of the business group tend to coordinate the allocation of an economic surplus between the group and the subcontractors in a way to manage the profitability of the subcontractors at a targeted level. We explore a rationale for why those subcontractors in an inferior bargaining position voluntarily commit themselves to the economic partnership with large business groups. We document ‘certification’ benefits for the subcontractors, such as fast sales growth, improved profitability, and more extensive capital investment. Overall, our results shed light on the importance of business groups’ reputation in emerging markets in overcoming potential hold-ups in their relationship-specific investments without resorting to formal equity ownership.