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Product Diversification and International Expansion of Business Groups: Evidence from India

Management International Review, (2012) 52 (2): 175-192.

26 Pages Posted: 3 Oct 2011 Last revised: 12 Oct 2012

Vikas Kumar

The University of Sydney Business School

Ajai Gaur

Rutgers Business School - Newark and New Brunswick

Chinmay Pattnaik

affiliation not provided to SSRN

Date Written: October 1, 2011

Abstract

Purpose: Does product diversification constrain or boost international expansion of business groups from emerging markets? What is the role of international orientation and group resources in moderating this relationship? Given the dominance of business groups as an organizational form in emerging markets and their recent international expansion, these research questions are pertinent and timely.

Methods: We use general linear square fixed-effects models to test our arguments using longitudinal data on foreign direct investment of 482 business groups, incorporating 4,038 firms from India over a period of 8 years from 2001 to 2008.

Results: We find that a high product diversification has an adverse effect on the international expansion of emerging market business groups, and that international orientation and group resources positively moderate this relationship.

Conclusions: Our findings suggest the inherent trade-off that exists between strategies of product diversification and international expansion for emerging market business groups. Those business groups that can effectively employ their learning from prior international exposure and their technical competences are better placed to simultaneously pursue a strategy of product diversification and international expansion.

Keywords: Product diversification, International expansion, Business groups, India

Suggested Citation

Kumar, Vikas and Gaur, Ajai and Pattnaik, Chinmay, Product Diversification and International Expansion of Business Groups: Evidence from India (October 1, 2011). Management International Review, (2012) 52 (2): 175-192.. Available at SSRN: https://ssrn.com/abstract=1936930

Vikas Kumar

The University of Sydney Business School ( email )

Storie Dixson Building H10
The University of Sydney
Sydney, NSW 2006
Australia
+ 61 2 9351 6438 (Phone)
+ 61 2 9036 5378 (Fax)

HOME PAGE: http://www.econ.usyd.edu.au/staff/vikask

Ajai S. Gaur (Contact Author)

Rutgers Business School - Newark and New Brunswick ( email )

Newark, NJ
United States

Chinmay Pattnaik

affiliation not provided to SSRN ( email )

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