This paper examines the performance of group affiliate firms vis‐à‐vis nonaffiliated firms during three distinct macroeconomic periods in a postreform institutional environment of an emerging economy. The investigation provides evidence that nonaffiliated firms perform better than firms affiliated to highly and moderately diversified groups as per profitability efficiency scores. However, firms affiliated to highly diversified groups perform better as per their marketability efficiency scores. Performance is gauged as per the Farrell efficiency measures using the nonparametric data envelopment analysis (DEA) method. The two efficiency measures considered here are profitability efficiency and marketability efficiency. In most of the past studies on performance comparison of group‐affiliated and nonaffiliated firms, performance evaluation of firm has been problematic as it is based on only one indicator. This is the first study in this line of inquiry to have used DEA, which reconciles multiple inputs and multiple outputs to provide a summary measure for performance assessment.