Who drives unrelated diversification? A study of Indian manufacturing firms

This paper builds on recent research that focuses on the context-specific nature of diversification and the impact of organizational ownership on the choice of diversification strategy. Set in the Indian manufacturing sector, it compares the influence of institutional investors and banks against the influence of CEOs and boards on unrelated diversification. Results show that (a) external constituents collectively have more influence on unrelated diversification than CEOs and boards, (b) institutional investors tend to discourage unrelated diversification, but banks are quite supportive of such moves, and (c) corporate governance constituents other than foreign directors do not have a statistically significant influence on unrelated diversification strategies.