Diversification and diffusion: A social networks and institutional perspective

Nan Zhou () and Andrew Delios ()

Asia Pacific Journal of Management, 2012, vol. 29, issue 3, 773-798

Abstract: We examine the diffusion of a major firm strategy, unrelated diversification, among a population of Chinese listed firms during the 1991 to 2002 period. We propose that a firm’s social network can serve as both an information disseminator and a channel of influence in the diffusion of the diversification decision. Further, we investigate how the institutional environment alters the role of a network over time. We find that firms are more likely to diversify into conglomerates if (1) they occupy a central position in the network; (2) they have higher levels of government shareholding; and (3) the firms with which they have network ties diversify. Moreover, as the institutional environment strengthens over time, the influence of a firm’s network partners decreases. Consistent with these results, we contend that diversification is not only a response to economic and agency concerns, but also a function of the social and institutional context in which a firm is embedded. Copyright Springer Science+Business Media, LLC 2012

Keywords: Diversification; Network theory; Institutional theory; China (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (8)

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DOI: 10.1007/s10490-010-9242-4

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