Effect of Business Group Affiliation on Firm Internationalization: The Case of India under Reforms

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Chakrabarti, Amit Baran.,Mondal Arindam. "Effect of Business Group Affiliation on Firm Internationalization: The Case of India under Reforms", Journal of East West Business, Forthcoming
Abstract:
We investigate how diversified business groups (BGs) influence the structural reform – firm strategy relationships by virtue of the effect it has on strategic choice and its implementation in a large emerging economy-India. By integrating BG, industrial organization and international business literature, we predict considerable differences in the exporting behaviour of BG affiliated firms based on their market competitiveness and governance dynamics. We test our predictions empirically with proprietary, longitudinal data of 6119 Indian firms over a 21 year period, starting from 1991-92 to 2011-12; and find support for most of the hypotheses. These findings suggest that knowledge of the heterogeneity within business groups are essential for understanding the response of business group affiliates in light of the progression of reform process in India. Our study thus contributes to a more complete conceptual understanding of the strategic responses of pro-market reforms of business group affiliates in emerging economies.