When the Fog Subsides: Strategic Reallocation in Indian Business Groups Amid Uncertainty Transition

Adithya N

IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: The paper investigates the strategic reallocation of resources by business group (BG) affiliated firms during times of reduced uncertainty in emerging markets. Using a Triple Difference method, we examine the response of BG-affiliated firms along historical, sectoral, and regulatory embeddedness to institutional voids. We find that BG-affiliated firms with exposure to past uncertainty and operating in sectors dependent on stable institutions reduce diversification more than their counterparts, while BG-affiliated firms embedded in regulations increase diversification more than their counterparts, viewing the reduction of uncertainty as an opportunity to secure a diversified portfolio through enhanced rules of control.

Date: 2025-04-16
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