Abstract
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. © 2008 British Academy of Management.
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