Abstract
We consider whether the impact of entrepreneurial orientation on business performance is moderated by the company affiliation with business groups. Within business groups, we explore the trade-off between inter-firm insurance that enables risk-taking, and inefficient resource allocation. Risk-taking in group affiliated firms leads to higher performance, compared to independent firms, but the impact of proactivity is attenuated. Utilizing Indian data, we show that risk-taking may undermine rather than improve business performance, but this effect is not present in business groups. Proactivity enhances performance, but less so in business groups. Firms can also enhance performance by technological knowledge acquisition, but these effects are not significantly different for various ownership categories.
Highlights
We consider whether the impact of entrepreneurial orientation on business performance is moderated by the company affiliation with business groups
Our results suggest that business group affiliated firms in emerging economies manage risk better relative to their independent counterparts: while the performance of independent firms declines with greater risk-taking, while that of group affiliated firms is either unaffected by or positively influenced
The ownership dummies and interactions between entrepreneurial orientation (EO) components and Indian business group affiliation are introduced in Column 2, and interactions with other ownership categories are added in Column 3
Summary
We consider whether the impact of entrepreneurial orientation on business performance is moderated by the company affiliation with business groups. Emergence and persistence of these ownership forms—in particular, business groups—is on account of capital market imperfections that can generally be traced back to low levels of investor and creditor protection The latter implies that existing firms with internal accruals are in a better position to expand, or diversify into new business ventures (Khanna & Palepu, 2000; Riyanto & Toolsema, 2008).
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
