Performance of business group affiliated firms in emerging markets : Causal mediation analysis of internationalization and investment into innovation strategy
- Resource Type
- JOURNAL
- Authors
- Purkayastha, Anish
- Source
- International Journal of Emerging Markets, 2018, Vol. 13, Issue 6, pp. 1538-1558.
- Subject
- research-article
Research paper
cat-STGY
Strategy
cat-IBUS
International business
Emerging markets
Internationalization
Performance
Business groups
Investment into innovation
- Language
- English
- ISSN
- 1746-8809
Purpose The purpose of this paper is to explore the existing mechanism through which business group affiliated firms in emerging markets (EMs) continue to generate superior performance. Design/methodology/approach The authors build our argument on the basis of how business group affiliation in EM facilitates internationalization and investment into innovation in affiliated firms compared to un-affiliated firm, resulting in higher firm performance. The authors use advance statistical modeling – causal mediation analysis to separate direct effect and indirect effect of business group affiliation in EM on performance through internationalization and investment into innovation of business group affiliated firms as mediating variables. Findings Based on 122,479 observations (firm year) from 17,235 Indian business group affiliated and un-affiliated firms, the findings help to identify that internationalization and investment into innovation of business group affiliated firms do have a mediating role in affiliation–performance relationship for EM business groups. Originality/value This study unravels the existing causal chain between business group affiliation in EMs and subsequent performance of affiliated firms. The authors complement institutional argument for superior performance of business group affiliation and focus on the performance implication of mediating strategic decisions in affiliated firms.