How do institutional transitions impact the efficacy of related and unrelated diversification strategies used by business groups?

Kannan Ramaswamy, Saptarshi Purkayastha, Barbara S. Petitt

Research output: Contribution to journalArticlepeer-review

21 Scopus citations

Abstract

Drawing from institutional theory and organizational theory, this paper reports findings from a longitudinal study of Indian business groups as they were responding to pro-market institutional reforms. It explores their diversification choices at the group level, and the group performance consequences of these choices during a period of institutional change (1988–2012). Results show that although overall group diversification had a positive impact on performance, as institutions developed and market reforms took root, unrelated diversification resulted in poorer performance. However, related diversification strategies resulted in positive group performance outcomes after pro-market reforms had taken root. This suggests that the performance consequences of alternative diversification strategies adopted by business groups change as institutional development occurs, an important facet of business group evolution that has received limited attention in the extant literature.

Original languageEnglish (US)
Pages (from-to)1-13
Number of pages13
JournalJournal of Business Research
Volume72
DOIs
StatePublished - Mar 1 2017
Externally publishedYes

Keywords

  • Business group
  • Diversification
  • Emerging economy
  • Institutional transitions
  • Performance

ASJC Scopus subject areas

  • Marketing

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