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Ownership structure and internationalization of Indian firms

Chitra Singla, Rejie George and Rajaram Veliyath

Journal of Business Research, 2017, vol. 81, issue C, 130-143

Abstract: We examine the longitudinal relationship between ownership structure and firm internationalization, in a sample of Indian firms. Drawing on principal-principal (PP) agency theory and the resource-based-view (RBV) of the firm, we argue that divergent preferences (motivations) of a firm's owners affect the firm's propensity to internationalize, while resource heterogeneity among these owners (owners' capability to access and provide resources) affects the firm's capability to internationalize. We argue that both motivation and capability are required for firms to pursue internationalization and that when either of these is missing in an owner, that owner's shareholding will be negatively associated with internationalization. Additionally, our results uncover an interesting dichotomy. While family owners with lower levels of ownership favor their firms' internationalization, they do not favor it at higher levels of ownership. Our results indicate that foreign owners appeared to adjust their roles to accommodate the preferences of the dominant family owners.

Keywords: Internationalization; Ownership structure; Resource-based view; Principal-principal agency; India (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1016/j.jbusres.2017.08.016

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