Corporate expansion during pro-market reforms in emerging markets: The contingent value of group affiliation and diversification

Deeksha Singh, Chinmay Pattnaik, Ajai S. Gaur and Elif Ketencioglu

Journal of Business Research, 2018, vol. 82, issue C, 220-229

Abstract: This study examines how emerging economy firms pursue growth in the domestic market during pro-market reforms. Grounding in the literature on institutional perspective on strategic adaptation during institutional transition, we propose an inverted U-shaped relationship between pro-market reforms and firms' pursuit of growth through new investments. However, the effect of pro-market reforms is likely to vary depending on organizational forms and prior logic of competition. More specifically, we propose that business group affiliation has a positive moderating effect, while prior diversification has a negative moderating effect on the relationship between pro-market reforms and corporate expansion through new investments. Our empirical findings based on a sample of 6072 new investment projects undertaken by 3028 companies in India during 1995–2014 provide robust empirical support for the hypothesized relationships.

Keywords: Business groups; India; Corporate expansion; Pro-market reforms; Diversification (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (24)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:82:y:2018:i:c:p:220-229

DOI: 10.1016/j.jbusres.2017.09.043

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