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Corporate expansion during pro-market reforms in emerging markets: The contingent value of group affiliation and diversification

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  • Singh, Deeksha
  • Pattnaik, Chinmay
  • Gaur, Ajai S.
  • Ketencioglu, Elif

Abstract

This study examines how emerging economy firms pursue growth in the domestic market during pro-market reforms. Grounding in the literature on institutional perspective on strategic adaptation during institutional transition, we propose an inverted U-shaped relationship between pro-market reforms and firms' pursuit of growth through new investments. However, the effect of pro-market reforms is likely to vary depending on organizational forms and prior logic of competition. More specifically, we propose that business group affiliation has a positive moderating effect, while prior diversification has a negative moderating effect on the relationship between pro-market reforms and corporate expansion through new investments. Our empirical findings based on a sample of 6072 new investment projects undertaken by 3028 companies in India during 1995–2014 provide robust empirical support for the hypothesized relationships.

Suggested Citation

  • Singh, Deeksha & Pattnaik, Chinmay & Gaur, Ajai S. & Ketencioglu, Elif, 2018. "Corporate expansion during pro-market reforms in emerging markets: The contingent value of group affiliation and diversification," Journal of Business Research, Elsevier, vol. 82(C), pages 220-229.
    • Handle: RePEc:eee:jbrese:v:82:y:2018:i:c:p:220-229
    DOI: 10.1016/j.jbusres.2017.09.043
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