Business Group Affiliation and Firm Strategy: A Competitive Repertoire Perspective

Abstract

We bridge the business groups and competitive dynamics view (in specific, competitive repertoire research stream) to examine competitive actions of business group affiliate firms vis-à-vis standalone firms. We posit that greater access to diverse resources, information and knowledge through the network of other firms in the business group enable affiliate firms to carry out a higher number—competitive repertoire intensity—and wider variety—competitive repertoire complexity—of competitive actions. Further, we theorize that access to significant amount of resources through the business group network and the accumulated knowledge and capability of group center in conceiving and implementing strategic actions will enable affiliate firms to exhibit higher competitive repertoire significance than standalone firms. In sum, we expect competitive strategy of business group affiliate firms to differ from that of standalone firms. We test our hypotheses on a sample of Indian firms during the time period 2009-2017 and find support. While extant research on business groups focus on ‘what’ and ‘why’ of business group affiliation, we enhance our understanding of business groups by engaging with ‘how’ business group affiliation influences firm strategy. We also extend competitive repertoire research to a new organizational context in an emerging economy.