Product Diversification and International Expansion of Business Groups: Evidence from India

TY - JOUR

T1 - Product Diversification and International Expansion of Business Groups

T2 - Evidence from India

AU - Kumar, Vikas

AU - Gaur, Ajai S.

AU - Pattnaik, Chinmay

N1 - Funding Information: Acknowledgements:  this research was supported with the Rutgers University Research council Grant (2010). the article benefited greatly from comments and advice provided by the two anonymous reviewers. We also thank the participants at the 2010 asia academy of Management conference for their comments on an earlier version of this paper.

PY - 2012/4

Y1 - 2012/4

N2 - Does product diversification constrain or boost international expansion of business groups from emerging markets? What is the role of international orientation and group resources in moderating this relationship? Given the dominance of business groups as an organizational form in emerging markets and their recent international expansion, these research questions are pertinent and timely. We use GLS fixed-effects models to test our arguments using longitudinal data on foreign direct investment of 482 business groups, incorporating 4,038 firms from India over a period of 8 years from 2001-2008. We find that a high product diversification has an adverse effect on the international expansion of emerging market business groups, and that international orientation and group resources positively moderate this relationship. Our findings suggest the inherent trade-off that exists between strategies of product diversification and international expansion for emerging market business groups. Those business groups that can effectively employ their learning from prior international exposure and their technical competences are better placed to simultaneously pursue a strategy of product diversification and international expansion.

AB - Does product diversification constrain or boost international expansion of business groups from emerging markets? What is the role of international orientation and group resources in moderating this relationship? Given the dominance of business groups as an organizational form in emerging markets and their recent international expansion, these research questions are pertinent and timely. We use GLS fixed-effects models to test our arguments using longitudinal data on foreign direct investment of 482 business groups, incorporating 4,038 firms from India over a period of 8 years from 2001-2008. We find that a high product diversification has an adverse effect on the international expansion of emerging market business groups, and that international orientation and group resources positively moderate this relationship. Our findings suggest the inherent trade-off that exists between strategies of product diversification and international expansion for emerging market business groups. Those business groups that can effectively employ their learning from prior international exposure and their technical competences are better placed to simultaneously pursue a strategy of product diversification and international expansion.

KW - Business groups

KW - India

KW - International expansion

KW - Product diversification

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U2 - https://doi.org/10.1007/s11575-012-0133-4

DO - https://doi.org/10.1007/s11575-012-0133-4

M3 - Article

SN - 0938-8249

VL - 52

SP - 175

EP - 192

JO - Management International Review

JF - Management International Review

IS - 2

ER -