Please use this identifier to cite or link to this item: http://scholarbank.nus.edu.sg/handle/10635/30923
Title: DIVERSIFICATION STRATEGY IN BUSINESS GROUP AFFILIATED FIRMS: EVIDENCE FROM CHINA
Authors: XU WEIWEI
Keywords: Business group, unrelated diversification, slack resources, power-seeking perspective, board of directors, identity theory
Issue Date: 13-Jul-2011
Source: XU WEIWEI (2011-07-13). DIVERSIFICATION STRATEGY IN BUSINESS GROUP AFFILIATED FIRMS: EVIDENCE FROM CHINA. ScholarBank@NUS Repository.
Abstract: This dissertation examines unrelated diversification strategies in business group- affiliated firms. In essay 1, using an enriched power-seeking framework, I provide a fresh angle to explain the motives and performance of unrelated diversification strategy in business group-affiliated firms. I argue that managers in business group-affiliated firms are likely to engage in unrelated diversification as a strategic choice, or a ¿protective investment¿, to protect the resources generated by the affiliated firms from being shared by other affiliated firms in the same group or to compete for a larger share of group-level resources. Unrelated diversification strategy can serve such purposes because it increases an affiliated firm¿s ability to influence the group headquarter, changes the compositions of the firm¿s assets to harder-to-expropriate physical and intangible assets and signals for the firm¿s need of more resources. Further, this study also suggests that the impact of acquired resources on the diversification-performance relationship hinges on the market availability of the resources. In essay 2 of this dissertation, drawing upon identity theory and social identity theory, I investigate the contingent role of group-dispatched executive directors in the unrelated diversification decision in group-affiliated firms. I argue that, group-dispatched executive directors have both group-affiliation identity and executive identity. Both identities are relevant and potentially conflicting in assessing a protective investment, such as unrelated diversification. I identify directors¿ organizational tenure, group-affiliated firms¿ performance and their dependence on the groups as relevant contextual or reflexive factors to determine which identity is more salient in the decision process. I test my theoretical framework and hypotheses using publicly listed group-affiliated firms in China and find general support for my predictions.
URI: http://scholarbank.nus.edu.sg/handle/10635/30923
Appears in Collections:Ph.D Theses (Open)

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