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Management International Review

, Volume 52, Issue 2, pp 175–192 | Cite as

Product Diversification and International Expansion of Business Groups

Evidence from India
  • Vikas Kumar
  • Ajai S. Gaur
  • Chinmay Pattnaik
Research Article

Abstract

  • 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.

  • We use GLS 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 2001–2008.

  • 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.

  • 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

Business groups International expansion Product diversification India 

Notes

Acknowledgements

This research was supported with the Rutgers University Research Council Grant (2010). The article benefited greatly from comments and advice provided by the two anonymous reviewers. We also thank the participants at the 2010 Asia Academy of Management conference for their comments on an earlier version of this paper.

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Copyright information

© Gabler Verlag 2012

Authors and Affiliations

  1. 1.Department of International BusinessUniversity of Sydney of Business SchoolSydneyAustralia
  2. 2.Department of Management and Global BusinessRutgers Business SchoolNewarkUSA

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