Towards a deeper understanding of performance variance in the context of business groups: A multilevel analysis at the business unit level
By Somnath Lahiri, Sarada Devi Gadepalli, Arindam Mondal, Sougata Ray
Long Range Planning | April 2025
DOI
doi.org/10.1016/j.lrp.2025.102508
Citation
Lahiri, Somnath., Gadepalli, Sarada Devi., Mondal, Arindam., Ray, Sougata. (2024). Towards a deeper understanding of performance variance in the context of business groups: A multilevel analysis at the business unit level Long Range Planning doi.org/10.1016/j.lrp.2025.102508.
Copyright
Long Range Planning, 2024
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Abstract
In this study, we employ a multilevel analysis to investigate the relative importance of industry,business group, corporation, and business unit effects on the performance of business units that arenested within business group affiliates. Empirical results demonstrate that business unit effects explain(1) about four times as much variance as does the corporate effects, (2) over four times as muchvariance as the industry effects, and (3) over eighteen times as much variance as the business groupeffects in business unit performance. Moreover, the results provide evidence that corporate effects aredistinct from business group effects and it is imperative to study the complex interplay between thetwo distinct headquarters to understand the impact of business group as an organizational form. Thesefindings extend our theoretical and empirical understanding of performance variability in the contextof business groups.

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