Do business groups in China and India penalize or reward high performing affiliates?

Do business groups in China and India penalize or reward high performing affiliates?

Business groups allocate resources internally to either reward its top performing affiliates or to subsidize weak ones, which is reflected in the performance persistence of affiliated firms. We find that resource allocation patterns diverge between business groups in China and India, as they operate in state capitalism systems where business and state interact differently. However, this divergence is less impactful once an affiliated firm internationalizes, as the home-based rules become less applicable to them.

Authors: Helen Wei Hu1, Lin Cui2 and Preet S Aulakh3

1Department of Management and Marketing, University of Melbourne, Melbourne, Australia;

2Research School of Management, Australian National University, LF Crisp, Building 26, Canberra, ACT 0200, Australia;

3Schulich School of Business, York University, Toronto, Canada

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Do business groups in China and India penalize or reward high performing affiliates?