Variations in ownership behavior and propensity to diversify: A study of the Indian corporate context

Kannan Ramaswamy, Mingfang Li, Rajaram Veliyath

Research output: Contribution to journalArticle

96 Citations (Scopus)

Abstract

The relationship between ownership and diversification has been the focus of renewed debate between financial economists and strategic management scholars. While financial economists hold that manager-controlled firms tend to reflect higher levels of diversification, strategy researchers argue that ownership and diversification are not systematically related. In throwing light on this debate, this study uses a fine-grained definition of ownership groups to explore how the different objectives and monitoring predispositions of distinct ownership groups might influence diversification strategy. The empirical examination is set in India to offer a striking contrast from the predominantly U.S.-based studies that have shaped the ongoing debate. Findings show that diverse ownership groups adopt different postures in monitoring and/or influencing organizational diversification. While some ownership groups are closely associated with focused strategies, and some encourage diversification, others are quite indifferent. These results suggest that the context-specific variation among ownership groups is germane to our understanding of diversification strategy.

Original languageEnglish (US)
Pages (from-to)345-358
Number of pages14
JournalStrategic Management Journal
Volume23
Issue number4
DOIs
StatePublished - Apr 2002
Externally publishedYes

Fingerprint

Monitoring
Managers
Propensity
Ownership
Diversification
Diversification strategy
Economists

Keywords

  • Corporate governance
  • Diversification
  • Indian industry
  • Shareholding groups

ASJC Scopus subject areas

  • Business and International Management
  • Management of Technology and Innovation
  • Strategy and Management

Cite this

Variations in ownership behavior and propensity to diversify : A study of the Indian corporate context. / Ramaswamy, Kannan; Li, Mingfang; Veliyath, Rajaram.

In: Strategic Management Journal, Vol. 23, No. 4, 04.2002, p. 345-358.

Research output: Contribution to journalArticle

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