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When does it make sense to focus business portfolios? A study of business group responses to institutional change in India

Kannan Ramaswamy (Arizona State University Thunderbird School of Global Management, Glendale, Arizona, USA)
Saptarshi Purkayastha (Indian Institute of Management, Calcutta, India)

Journal of Asia Business Studies

ISSN: 1558-7894

Article publication date: 12 December 2017

197

Abstract

Purpose

This paper aims to report the findings from a longitudinal study of Indian business groups responding to the pro-market reforms that the government had initiated. It explores their diversification choices at the group level and the group performance consequences of these choices during a period of institutional changes (1990-2008).

Design/methodology/approach

Ordinary least squares regressions were used to analyze data spanning the 1988-2008 study period for 98 Indian business groups.

Findings

Results show that business groups that focused their portfolios in the early stages of institutional reforms tended to perform worse than their counterparts that did not do so. However, as market reforms became more established, business groups that made the transition from an unfocused to a more focused portfolio experienced superior performance consequences.

Originality/value

The findings underscore the temporal dimension of focusing and suggest that both changing strategy by refocusing business portfolio too early or waiting too long to refocus can hurt performance outcomes.

Keywords

Citation

Ramaswamy, K. and Purkayastha, S. (2017), "When does it make sense to focus business portfolios? A study of business group responses to institutional change in India", Journal of Asia Business Studies, Vol. 11 No. 4, pp. 466-480. https://doi.org/10.1108/JABS-09-2016-0124

Publisher

:

Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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