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Indian business groups: Evolution and transformation

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Abstract

Business groups are an important constituent of many emerging economies. In this paper, we focus on the evolution and transformation of Indian business groups (IBGs) over two economic eras — pre-reform era (pre 1991) and reform era (post 1991). To this end, we analyze IBG behavior during these periods, and explain the implications of such behavior on IBG value creation. Our conceptualization of IBG dynamics utilizes the perspectives of product relatedness and institutional relatedness, and undertakes a broad review of the extant literature.

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Notes

  1. Institutions are “humanly devised constraints that shape human interaction” e.g., banks, regulatory bodies, courts, political parties, marketing research organizations etc. (Khanna & Palepu, 1997; North, 1990:3). Institutional frameworks refer to “the set of fundamental political, social and legal ground rules that establishes the basis for production, exchange, and distribution” (Davis & North, 1971:6).

  2. Lee, Peng, and Lee (2007) reviewed the BG literature on South Korea, and reported a similar pattern: Studies using datasets from an earlier era (until the early 1990s) tend to report a diversification premium, whereas more recent studies often find a diversification discount.

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Correspondence to Ben L. Kedia.

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We are grateful to the two anonymous reviewers for their helpful comments. Our sincere thanks are due to Andrew Delios, Ajai Gaur, Mike Carney, and especially Mike Peng for their valuable suggestions. We also thank the Asia Academy of Management, NUS Business School, and Memphis CIBER for providing financial support to attend APJM special issue conference.

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Kedia, B.L., Mukherjee, D. & Lahiri, S. Indian business groups: Evolution and transformation. Asia Pacific J Manage 23, 559–577 (2006). https://doi.org/10.1007/s10490-006-9020-5

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