Strategic change of firms in response to economic liberalisation in an emerging market economy

Abstract

This paper presents an analysis of how policy induced changes in the institutional environment in India, a big emerging market undergoing economic liberalisation, have influenced strategic behaviour of firms. An exploratory multivariate model is empirically fitted using LISREL. Results suggest that environment was to be the most dominant exogenous factor influencing corporate strategy and performance of firms. However, firms having better environment-strategyfit' achieved superior performance. Initial resource position seems to have limited influence on strategy and performance. The results also suggest that increased their scale of business and diversified into deregulated industries selectively but aggressively achieved superior performance.