Abstract
This article examines how heterogeneous features among business groups
influence the corporate diversification-firm performance relationship.
The study classifies heterogeneity along three dimensions: group
size, group diversity, and share ownership. Using a sample of firms
from India, the study finds some evidence that for firms affiliated
to larger business groups, corporate diversification enhances firm
performance. However, business group diversity does not influence
the diversification-performance relationship. The impact of diversification
on firm performance differs substantially owing to the heterogeneity
in share ownership. The paper documents an interesting interplay
between business group and ownership structure. © 2011 Elsevier
Inc. All rights reserved.
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