Abstract
This paper explores the nature of the influence that business groups
exert in shaping performance outcomes in emerging economies. Set
in India, this study used a longitudinal research design to assess
the independent and collective performance impact of group affiliation
and diversification both before and after economic reforms were introduced
in the country. Consistent with the institutional theory perspective,
results show that in the pre-reform period the group structure exerted
an important positive moderating effect on the diversification-performance
relationship. However, these group benefits appear to persist even
after many of the sources of market failure had started to decline
rapidly. This persistence of group effect may be indicative of the
continued relevance of non-diversification benefits of the group
structure in emerging economies. It may also be indicative of the
fairly slow process of building institutional infrastructure in emerging
economies where reforms are seldom introduced en masse but more a
series of continuing measures as was the case in India. © 2010 Springer
Science+Business Media, LLC.
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