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International Diversification, Business Group Affiliation and Firm Performance: Empirical Evidence from India *
Author(s) -
Gaur Ajai S.,
Kumar Vikas
Publication year - 2009
Publication title -
british journal of management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.407
H-Index - 108
eISSN - 1467-8551
pISSN - 1045-3172
DOI - 10.1111/j.1467-8551.2007.00558.x
Subject(s) - diversification (marketing strategy) , internationalization , corporate group , international business , business , emerging markets , sample (material) , empirical evidence , business administration , industrial organization , economics , marketing , international trade , management , corporate governance , finance , philosophy , chemistry , chromatography , epistemology
We investigate the impact of business group affiliation on the relationship between international diversification and firm performance for emerging economy firms. We develop the theoretical arguments based on an integration of the literature on international diversification with the institutional theory perspective. We argue for a U‐shaped relationship between international diversification and firm performance, and suggest that a firm's affiliation to a business group moderates the relationship between international diversification and firm performance. Based on a sample of Indian firms, we find that firm performance is positively related to the degree of internationalization, while business group affiliation reduces the positive effect of internationalization on firm performance.