The link between pre-entry conditions and the post-entry performance of diversifying entries by Korean largest business group so called Chaebol was examined. Pre-entry conditions were measured as industry, competitive interaction, parent-entrant relatedness, parent resource. The post-entry performance were measured by survival and profitability. This paper showed that the parent-entrant relatedness and parent resource were much more important in the post-entry performance of diversifying entries than industry and competitive interaction. It meant that Korea business groups were the economic institutions to minimize transaction costs prevalent in Korea.