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The Nature of Diversified Business Groups: A Research Design and Two Case Studies[Note 1. We thank Severin Borenstein, Paul Harrison, Charles Hill, Jan ...]
Author(s) -
Ghemawat Pankaj,
Khanna Tarun
Publication year - 1998
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/1467-6451.00060
Subject(s) - restructuring , scope (computer science) , economies of scope , sample (material) , industrial organization , business , economics , market economy , marketing , finance , economies of scale , chemistry , chromatography , computer science , programming language
Diversified business groups dominate the private sectors of most of the world’s economies. Several of these economies have undergone sudden policy changes that significantly increase domestic competitive intensity. We demonstrate how the changes in corporate scope that accompany such “competitive shocks” can be used to weigh the importance of different explanations for the existence of diversified business groups. We illustrate our reasoning by studying the restructuring of two of India’s largest business groups following a comprehensive post‐1991 package of policy reforms. The case studies also elucidate aspects of the restructuring process that should inform larger‐sample empirical analyses.