Strategic Response to Inward Foreign Direct Investment: A Study of Indian Family Firms
By Arindam Mondal, Sougata Ray, Somnath Lahiri
Management International Review | May 2021
DOI
doi.org/10.1007/s11575-021-00441-2
Citation
Mondal, Arindam., Ray, Sougata., Lahiri, Somnath. Strategic Response to Inward Foreign Direct Investment: A Study of Indian Family Firms Management International Review doi.org/10.1007/s11575-021-00441-2.
Copyright
Management International Review, 2021
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Abstract
International business scholarship suggests that inward FDI (IFDI) may elicit a wide variety of strategic response from host country firms. While few studies have examined emerging market firms’ outward FDI (OFDI) strategy as a response to IFDI by foreign MNCs, no study has examined if and how family firms—a common occurrence in emerging markets—initiate similar response. Drawing on three streams of literature (competitive dynamics of emerging market firms, institutional development, and family firms), this study empirically examines a sample of Indian family firms over a six-year time-period. Results suggest that family firms increase their existing OFDI in response to IFDI announcements by foreign MNCs. Results also demonstrate that the OFDI-growth response varies across firms and is shaped by heterogeneity in management type (professional/family-based), extent of foreign institutional ownership (high/low), and family CEO’s international experience (possessed/not possessed). These findings are new to the literature. The study concludes by discussing the theoretical and managerial implications of the findings, and highlighting fertile avenues of future research.

Sougata Ray is a Professor of Strategy and Entrepreneurship (Practice), Thomas Schmidheiny Chair Professor, and Executive Director of the Thomas Schmidheiny Centre for Family Enterprise, at the Indian School of Business (ISB). Earlier, he served at the Indian Institute of Management Calcutta for over two decades as a Professor of Strategic Management, a member of the Board of Governors, and Dean. He was also a senior-level executive at Infosys Technologies Limited for two years in a strategic role as Head of innovation Lab. He is an alumnus of Indian Institute of Management, Ahmedabad and the Indian Institute of Engineering, Science and Technology, Shibpur.

Professor Ray’s research interests have evolved over the years in understanding various facets of strategic management, entrepreneurship, innovation and the governance of firms and business groups in high-growth economies. Given the ubiquity of family firms in India and observing how family owners and leaders play a pivotal role in shaping the future of enterprises, he was gradually drawn into family business research. In recent years, under the aegis of the Thomas Schmidheiny Centre for Family Enterprise, he has been spearheading a mega programme towards developing a solid research-based understanding of family firms and business groups in India and South Asia. He has also been leading a research programme in the areas of social entrepreneurship, corporate sustainability strategy and practices, bottom-of-the-pyramid initiatives, and involvement of corporations in inclusive and sustainable development.

Professor Ray is one of the most prolific and cited home-grown strategy scholars in India. He has been publishing regularly in reputed scholarly journals and presenting in leading peer-reviewed international conferences. He has received over half a million dollars in research grants, several prestigious research and teaching awards, and numerous award nominations.

He blends over three decades of experiences in diverse roles – as an international-quality academic, research, and institution builder, alongside  hands-on corporate managerial and governance roles as an executive, member of the Board of Directors, and co-founder of startups.. He has been an advisor to numerous medium and large corporations, family businesses, and startups, and he has served as Principal Consultant to leading international development agencies. He currently sits on the governing and advisory boards of several listed and unlisted companies, startups, and social enterprises.

Professor Ray has taught in numerous executive education programmes and has designed and conducted many workshops exclusively for owner-managers, entrepreneurs, and C-level executives of companies in India, Asia, Middle East, Nordic and Scandinavian countries. Over the years, he has led over thirty C- level executive delegations to countries on every continent for high-level meetings with the ministers, high-ranking officials, multilateral agencies such as the WTO and ILO, Chambers of Commerce, MNCs, industrial organisations, research labs, and academic institutions.

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Sougata Ray