Inter-Organizational Power within Family Business Group: Impact on New Venture Creation

Posted: 7 Sep 2017

See all articles by K. Ramachandran

K. Ramachandran

Indian School of Business (ISB), Hyderabad

Sougata Ray

Indian Institute of Management (IIM), Calcutta

Amit Chakrabarti

Indian Institute of Management Visakhapatnam

Date Written: February 2, 2016

Abstract

The purpose of this paper is to examine the impact of family business group (FBG) heterogeneity on new venture creation in India. Using a multiple regression model, this study examines the moderating effect of FBG heterogeneity (relative size, relative profit, and relative market share) on FBG size and new venture creation relationship in a sample of 8344 new projects initiated by 526 Indian FBG firms. We find that, bigger FBG firms on average have higher positive impact on new venture creation. Moreover, FBG firms that have higher relative profit or higher relative size are able to enhance the positive impact of FBG size on new venture creation. Finally we also found that FBG firms within bigger groups that have higher relative market share are able to execute higher number of new ventures, but are conservative in terms of the size of projects undertaken. This study adds to literature on the strategic choices adopted by family firms as too little is known about the effect of family business group heterogeneity on new venture creation in emerging markets such as India.

Keywords: Family Business group; New venture creation; Emerging markets

Suggested Citation

Ramachandran, K. and Ray, Sougata and Chakrabarti, Amit, Inter-Organizational Power within Family Business Group: Impact on New Venture Creation (February 2, 2016). Indian School of Business WP 3031852, Available at SSRN: https://ssrn.com/abstract=3031852

K. Ramachandran (Contact Author)

Indian School of Business (ISB), Hyderabad ( email )

Hyderabad, Gachibowli 500 019
India

Sougata Ray

Indian Institute of Management (IIM), Calcutta ( email )

Diamond Harbour Road
Kolkata, West Bengal 700104
India

Amit Chakrabarti

Indian Institute of Management Visakhapatnam ( email )

Andhra University Campus
Visakhapatnam, Andhra Pradesh 530003
India

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