Abstract
The paper aims to measure the extent of international diversification achieved by Indian companies in the recent time period. The study also investigates the nature of international diversification of companies during their transition beyond national boundaries. This evaluation of the firm’s nature and extent of internationalization is further extended to cover the period of COVID-19 as well. The Jacquemin and Berry Entropy Approach (1979) is applied to operationalize the firm’s international diversification. It facilitates the measurement of both inter-region and intra-region diversification. World Bank Geographical Region Classification Framework (2018) has been used to facilitate the applicability of the approach applied. Results indicate that Indian companies were inclined to grow beyond their home territories. However, the extent of international diversification is low as ‘Internationally Low Diversification (ILD)’ reveals to be the most popular strategy amongst Indian companies. Nature depicts a preference for relatedness than unrelatedness for overseas expansion as firms prefer intra-region expansion as compared to moving inter-region. Stagnation and halt are witnessed in the global expansion of companies in the period of the pandemic. The present study is novel as it comprehensively evaluates the international growth strategies preferred by Indian companies in the pre-pandemic and the pandemic period.
Highlights
International Diversification is defined as the expansion of a firm outside the border of the home country into different geographical regions or countries (Hitt et al, 1997; Capar & Kotabe, 2003)
This section deals with an analysis of the nature and extent of international diversification of Indian companies
During the year 2009-10, out of 429 companies, 219 (51%) companies were in the category of Internationally Non- Diversifier (IND) whereas 210 (49%) companies followed the strategy of Internationally Diversifier (ID)
Summary
International Diversification is defined as the expansion of a firm outside the border of the home country into different geographical regions or countries (Hitt et al, 1997; Capar & Kotabe, 2003). The strategy many a time provides an opportunity to gain access to abundant resources, cheap land, and low-cost labor outside the home country (Tallman & Li, 1996; Atlaf & Shah, 2016). It creates ownership advantages abroad (Cohen, 1972; Sambharya, 1995; Hitt et al, 1997; Gokmen & Temiz, 2013). Transfer of a firm’s resources into heterogeneous regions or countries is just like putting several eggs into multiple baskets This leads to the reduction of risk and enhances stability in the earnings of the firm (Miller & Pras, 1980; Sambharya, 1995; Abdullah, 2015). International diversification is a supreme strategy of sustained growth
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