Preet S. Aulakh

Business groups emerged in developing economies through direct or indirect support from the state in order to overcome a variety of institutional voids and/or to further state objectives of economic growth. However, the efficacy of this organizational form and its associated governance structures have been debated given the dual possibility of business groups to allocate resources amongst its affiliates for crosssubsidization or winner-picking. We argue that elements of the institutional environment comprising of the state’s approach to organizations and the political context of these interactions vary across countries, thereby influencing business groups’ resource allocation strategies and affecting the persistence of affiliated firms’ superior performance. Contrasting the types of state capitalism in China and India, we develop and test our hypotheses. We find that the effect of business group affiliation on firms’ superior performance persistence is stronger in a state-led system of state capitalism (e.g., China) than in a cogoverned system (e.g., India) and that this divergence of the business group effect is weakened as affiliated firms internationalize. Our findings have implications for understanding business groups across institutional contexts and the influence of diversity in the types of state capitalism on organizational strategies.

In this article, we examine the influence of owner CEOs’ motivations and authority on strategic risk‐taking behavior of firms as reflected by their investments in foreign markets. We theorize that owner CEOs, aided by their strategic leadership, long‐term orientation, and less‐restricted decision‐making powers, will facilitate their firms’ strategic decisions that are exploratory in nature and, thus, are more risky. We further propose that the owner CEO effect is likely to differentially interact with performance aspirations and governance structures of firms in influencing internationalization. We test our predictions on a longitudinal panel dataset of 226 Indian manufacturing firms over the 10‐year period from 2002 to 2011 and find support for our hypotheses. We contribute to the emerging literature on microfoundations and behavioral strategy.

The objective of this paper is to examine the representation of shifting legalities in Amitav Ghosh’s novel Sea of Poppies within the context of emerging legal regimes in early nineteenth-century British India. I argue that the novel makes two important interventions in the corpus of research interested in intersections of colonial histories and the development of socio-legal institutions. First, through overlapping stories of numerous characters who are differentiated by multiple levels of subalternity in terms of race, class, and gender as they navigate the colonial and customary legal regimes, the novel foregrounds the interconnections between law and the colonial enterprise and moves beyond the binary categories of legal subjects under colonial rule. Second, by showing the possibility of collective agency in the liminal space of the ship, the novel contributes to the growing attentiveness of scholars to the potential for legal subjects to individually or communally intervene in the formation of alternative and less-coercive legal regimes.

We assess the theoretical underpinnings and associated empirical findings of the three-stage sigmoid–curve relationship between degree of internationalization (DOI) and performance by re-examining the results reported in one of the prominent studies in the literature. We further conduct our own analyses of 23,474 observations of 2,620 US manufacturing firms over the period 1976–2008 and account for self-selection of firms into different degrees of internationalization by using a generalized propensity score estimator. Both sets of results show that the relationship between DOI and performance conforms to a mostly negative sigmoid curve and does not support the three-stage theorization. Further examination reveals that two major conceptual and empirical shortcomings underlie the disparity between the theoretical predictions of the three-stage model and these empirical findings. First, whereas theory relies overwhelmingly on enhanced scale of operations as a causal mechanism through which internationalization contributes to performance, empirical studies preclude proper identification of scale-related benefits. Second, theory and empirics tend to confuse temporary difficulties experienced upon entry into international markets with examining the benefits realizable at different levels of DOI, regardless of the firm’s short-term difficulties in realizing those benefits. Our empirical results show that correcting for each of these shortcomings contributes to diminishing the theory–empirics gap.

The relationship between contractual and relational arrangements in interorganizational relationships has been subject to an ongoing debate. We propose that in the context of cross-border partnerships, the governance mechanisms can be both substitutes and complements depending upon contingencies posed by uncertainties of two different origins: environmental and behavioral. We argue that environmental uncertainty (i.e., instability and unpredictability of the external environment) drives the formal and relational arrangements into a more substitutive relationship by elevating the adaptation complications in which increasing reliance on either form of governance inhibits the effective operation of the other. Contrastingly, behavioral uncertainty (in the form of inadequate common grounds and shared frameworks among collaborating firms) encumbers the understanding of partner behavior and conduct and drives the governance mechanisms into a more complementary relationship in which contractual and relational mechanisms facilitate the effective operation of each other. Empirical results from 205 cross-border partnerships of large U.S. firms support our theorized relationships.

Overseas acquisitions as a mode of international expansion entail a high level of risk, especially for firms from emerging economies which face considerable liabilities of foreignness and newness in international markets. Building on the behavioral risk-taking perspective, we examine the role of ownership characteristics on the propensity of Indian firms to make foreign acquisitions. Empirical results from a sample of BSE 500 Indian firms during the 2002–2011 period show that after controlling for firm level resources and capabilities identified in the prior literature, international experience of firm CEOs, promoter shareholding, and ownership share of foreign institutional investors positively influence firms’ acquisition propensities in foreign markets. Furthermore, our results show that the effects of these determinants on overseas acquisitions are stronger for stand-alone independent firms than for those affiliated to business groups.

Since its independence in 1947, India has undertaken several different paths towards economic development and growth. These paths have evolved due to the unique internal political-economic context emanating from a history of colonization and the external pressures arising from global institutional and economic considerations. The need to accommodate domestic realities and external pressures led to the emergence of diverse organizational forms in India. Placing the contemporary organizational landscape within the historical political-economic context, we discuss the plurality of organizational forms that dominate the Indian economy, their evolution in the period after economic liberalization in 1991, and their attempts to catch-up and participate in global markets. Furthermore, using the four papers published in the special issue as a starting point, we discuss how the organizational landscape in India offers opportunities to contribute to practice and research, particularly in the domains of business groups, emerging market multinationals, and reverse innovation.

This paper investigates whether and when affiliation to business groups enables or constrains firms’ international search behavior during institutional transitions. We theorize that given the unique structure and complex form of business group organizations, the search behavior of affiliated firms is influenced by the degree of (mis)alignment in outlook at the group and affiliate levels of management. We identify the scope of institutional changes, business group attributes, and affiliate characteristics as sources of such (mis)alignment. The results from panel data on 298 firms from the Indian pharmaceutical industry for the 1992–2007 period show that the constraining effects of business group affiliation are observed only when institutional changes are specific to the affiliates’ industry and not when broad institutional changes affect the business group as a whole. Moreover, we observe heterogeneity in the search behavior of group affiliated firms. First, the degree of misalignment is greater in the case of affiliates belonging to older business groups and those that are more distant in terms of age and industry since the group’s founding. Second, by contrast and suggesting an alignment in outlook, we find that affiliated firms that occupy a prominent position within a group or industry are able to bargain for and receive attention and support from the business group to undertake international search. Our findings have implications for research on the role of business groups in a changing institutional context and for the strategic adaptation of firms embedded in complex organizational and institutional settings.

We examine the role of internationally acquired knowledge and supra‐firm institutional infrastructure on developing firms’ innovation orientation. Empirical results, based on a panel of 11,048 Indian manufacturing firms during the period 1990 to 2009, show that the macro‐ and micro‐institutional context in which firms are embedded condition the effect of global resource and product market participation on indigenous innovation efforts. In particular, technology imports (accumulative learning) have a stronger effect on inducing investments in innovation when the macro‐institutional development is weak and for firms that are affiliated to business groups. However, product market internationalization (assimilative learning) plays a more important role in facilitating innovation efforts as the institutional environment becomes stronger and for independent firms that do not possess the network advantages inherent in business groups.

This study examines the relationship between power dependence and practice standardization in the context of cross-border alliances. Existing studies have typically assumed that standardization or adaptation is a unilateral decision made by multinational corporations (MNCs) but ignored the influence of the relative power of multinational and local partners under conditions of government influence. Drawing on resource dependence theory (RDT), we argue that the power imbalance between multinational and local firms may shape the standardization of practices in their established alliances. The results, based on a sample of 243 Fortune 500 US companies, indicate that when the level of government influence is high, the positive effect of MNCs’ resource importance on practice standardization diminishes and the negative effect of local firms’ alternative resources becomes stronger. These findings suggest that RDT has important implications for understanding standardization versus adaptation in cross-border alliances.

Granting of exclusive rights is an important consideration for firms using licensing as a mode of entry into foreign markets, as exclusive contracts reduce licensors’ flexibility in a given market during the term of the agreement. By granting exclusivity to a licensee with greater technological potential, the exchange partners can increase the potential transactional value of the licensing agreement. At the same time, a licensee with strong technological potential will increase the threat of transactional hazards due to underinvestment and rent appropriation. In this paper, we develop and empirically test a model that evaluates the balancing of transactional value and transaction costs in exclusive licensing. In particular, we identify the conditions under which exclusive contracts are likely to be granted to foreign licensees with strong technological potential. Empirical results from a multilevel model, based on 375 international licensing agreements of US firms in high-technology industries during 1995–2008, show that licensees with a stronger technological potential are more likely to be granted exclusive rights in countries with strong intellectual property rights protection, and in industries with a high rate of technological change; but are less likely to be granted exclusive rights when there is a high degree of overlap between licensor and licensee products.

Interfirm relationships among partners from institutionally distant environments are subject to governance difficulties, owing to the paucity of shared cognitive and regulatory frameworks. We examine the potential of formal contracting and relational governance developed at the partnership level to overcome the formal and informal institutional gap at the country level. Empirical results from a sample of 184 international partnerships of large US firms support an overall substitutive relationship between informal institutional frameworks and interorganizational relational arrangements whereby the performance benefits of relational governance are reinforced at higher degrees of informal institutional distance. Contrastingly, formal institutional frameworks and contractual governance are found to have a complementary relationship, with performance gains from formal contracting undermined at higher degrees of formal distance.

This article investigates the journey of the Komagata Maru in 1914, and the multiple exclusions of its primarily Sikh passengers from various colonial jurisdictions, through the lenses of global and local legitimacy contestations across the British Empire at the beginning of the twentieth century. The paradox of its subjects’ mobility (i.e. accommodating the aspirations of ‘white-only’ self-governing colonies and disapproving the race-based exclusion of its ‘non-white’ subjects) had consumed the Empire for almost two decades. This contradiction necessitated justifications of exclusion that would be compatible with the liberal ideology of all subjects having equal rights and palatable to the political expediency considerations of different colonies. The transformation of the legal identities of the ship’s passengers from ‘farmers’ to ‘labourers’ to ‘seditionists’ during a short span of five months facilitated the institutionalisation of alternative logics of exclusion based on class and loyalty to the Empire. Through an in-depth study of an important episode in colonial history, this article attempts to foreground how intricate linkages among law, legitimacy and identity played out during a critical juncture for the British Empire.