Performance Implications of Diversification in Professional Service Firms: The Role of Synergies

There is growing interest in the Professional service firms because they are seen as archetype of the knowledge-based economy. In this study we look at under researched area of exploitation of synergies in professional service firms and its implications for performance. Overcoming the uni-dimensional nature of extant studies, we examine the performance implications of diversification along the twin dimensions of services they offer and the knowledge of the industry domain of their clients. We hypothesize that moderate levels of coherence in these dimensions lead to improved performance while excess coherence in these domains lead to diminished performance. These predictions are tested and supported by data from the Indian IT industry which is synonymous with emergence of knowledge economy in India. Our study thus contributes to the theory of diversification of professional service firms.

The Transformation of Microfinance in India: Experiences, Options and Future

The paper looks at the growth and transformation of microfinance organisations (MFO) in India. We first, define microfinance and identify its "value attributes". Having chosen only those MFOs that have microfinance as the core, we look at the transformation experiences. To understand the transformation experiences better, we identify issues that trigger transformation viz: size, diversity of services, financial sustainability, focus and taxation. Having identified these we look at transformation experiences internationally. We examine the Bolivian, Kenyan, Bangladeshi and the Indonesian experience. We then look at the Indian experiences. We argue that the transformation experiences in India are not large in number. However, we have found that there are three forms of organisations that seem to be popular in the microfinance sector - the Non-Banking Finance Companies, the Banks - both Local Area Banks and Urban Co-operative Banks and the Co-operatives. We then argue that in the Indian case, we find that the MFO spins off from the NGO rather than the NGO transforming itself. Having examined various options, we conclude that there is no ideal or easy path for MFOs to mainstream in India. This has implications for regulatory framework. We argue that there should be regulatory changes that allow smaller MFOs to get into more complex forms as they grow organically. We also argue that NGOs should be allowed to invest in the equity of MFOs and MFO promoted banks, as is the case in Bolivia and Africa. We maintain that entry norms on capitalisation for the current forms of organisations (NBFCs, Co-ops and Banks) need not be changed to ensure only genuine MFOs make use of the legislation and not other organisations masquerading as MFOs.

Knowledge Flows and Capability Building in the Indian IT Sector: A Comparative Analysis of Cluster and Non-Cluster Locations

The role of industrial clusters in the industrialization of many emerging economies continues to dominate the debate among policy makers and researchers worldwide. While recent discussions on this debate have focused on knowledge spillovers among participants within clusters, knowledge flows between non local networks and the cluster actors have not been accorded due attention in the literature. Further, the literature does not compare the relative impact of knowledge flows among firms within clusters and firms outside clusters. In this study, we attempt a comparative analysis of the role of knowledge flows in capability formation among firms in the Indian Information Technology sector (IT sector) across cluster and non-cluster locations. The empirical results suggest that at the firm level, leveraging of capabilities to enhance performance and networks to build capabilities is not automatic; structural features of the firms’ location enable this transformation. Moreover, while capabilities affect performance of firms positively only in clusters, economies of scale and some strategies like quality certification used by firms impact performance of firms outside clusters. Interestingly, although economies of scale do not impact the performance of firms within clusters, they do, however affect the capability formation of firms within clusters only. Further, we found that local and national non-customer networks affect capability formation of firms within and outside clusters whereas international customer networks affect capability formation of firms within clusters only. These have implications for how firms can develop appropriate strategies to enhance their performance.Industrial Clustering, Information Technology industry, Networks, Capabilities

Finding the microfoundations of organizational ambidexterity - Demystifying the role of top management behavioural integration

Organizational ambidexterity in a firm is significantly influenced by the behavioural integration of the Top Management Team (TMT). Researchers observe that ambidextrous firms are associated with two dimensions of dexterity, namely, balanced and combined dimensions. However, studies do not explain the varied effects of behaviourally integrated TMTs on the different dimensions of ambidexterity. A clear understanding of this relationship will help firms choose the specific TMT processes needed to facilitate specific dimensions of ambidexterity. We address this research gap and test our research model with structural equation analyses on data collected from 78 SMEs. We observe that behavioural integration processes mostly enhance a firm's combined ambidexterity. Further, we find that combined ambidexterity completely mediates the relationship between behavioural integration and firm performance. Our study adds to the literature on ambidexterity, micro-foundations, and the theory of behavioural integration, and guides small firms in their choices of behavioural and innovation practices

What Drives Performance of Indian IT Firms in Clusters?

Presented at the GLOBELICS 2006 conference in India during 4-7 October 2006.Session III.3 Innovations in New Technologies: IT and B

Limiting role of resource dependence: an examination of director interlocks, board meetings and family ownership

Purpose - This paper attempts to examine the activity and involvement of board of directors in internationalization activities of firms in emerging markets, by evaluating the resource provisioning roles of interlocks provided by board of directors, and the frequency of board meetings. We demonstrate that the effectiveness of board involvement is contingent upon the levels of family ownership in firms since family ownership could impact the firm’s ability to utilize the presence of different types of board members.Design/methodology/approach - We test our hypotheses on a sample of listed Indian companies, extracted from the Prowess database published by the Centre for Monitoring Indian Economy (CMIE), a database of the financial performance of Indian companies. On a panel of 3133 firm years of 605 unique Indian firms with foreign investments, over a time period of 2006-2017, we apply different estimation techniques. Findings - The results demonstrate that both board meeting frequency as well as director interlocks are instrumental in supporting internationalization activities in emerging market firms. However, family ownership moderates the role of insider and independent interlocks on internationalization investments in different ways; we find that interlocks provided by independent directors support internationalization activities in family firms, whereas interlocks provided by insider directors do not. Further, the study also finds that board meetings are less effective in internationalization of family firms.Practical implications - We conclude that family firms aiming at international diversification require to develop more connected and networked independent directors to enable internationalization in firms. While independent director interlocks enhance the international investments, it is also useful to know that board meetings are ineffective in utilizing the resources in family firms. This points to the possibility that family firms should device mechanisms to integrate family meetings with board meetings so that they can utilize the within-family processes to aid in their internationalization decisions.Originality/value – We contribute to resource dependence theory by understanding its limiting role in family firms. Theoretically, we help delineate the limiting resource provision role of the insider directors vis-à-vis independent directors. We argue that the resource provision role of insider director interlocks does not effectively help in internationalization in comparison to independent director interlocks in family dominated firms. Consequently, our study shows the limiting role of resource provision and utilization by family owned firms in comparison to non-family owned firms.</div

Internationalization of hybrid state-owned enterprises from emerging markets: Institutional investors as enablers

Owing to privatization and divestment, State Owned Enterprises (SOEs) in many emerging markets are evolving in their form and function. SOEs, increasingly, are hybrid organizations, where the state is one of the owners along with other ownership groups such as institutional investors. Combining the resource-based view and institutional perspectives, we argue that the different ownership groups within the SOE can be instrumental in promoting/deterring the internationalization efforts of SOE. Empirical results from a sample of 1310 firm year observations of 116 unique firms in the 2011-2019 time-period demonstrate that state and foreign institutional ownership impact SOE internationalization negatively whereas domestic institutional ownership has a positive impact on SOE internationalization. Additionally, we examine interactions between different hybrid ownership groups and find that both foreign and domestic institutional investors can offer resource advantages to enable state owners to invest in internationalization activities. This study contributes towards a deeper understanding of ownership hybridity, internationalization challenges and resource mobilization in SOEs from emerging markets. </p

Institutional investors and international investments in emerging economy firms: A behavioral risk perspective

While the extant literature has examined the influence of controlling and non-controlling principals on the internationalization decisions of emerging market firms, heterogeneity among non-controlling principals is largely ignored. The risk characteristics of different groups of owners, shaped by their institutional environments, could contribute to the differences in their preferences for firm internationalization. In this paper, we draw insights from institutional theory and behavioral risk perspective to examine the risk propensities and risk perceptions of various non-controlling principals, such as pressure-resistant (FIIs and mutual funds) and pressuresensitive (banks, insurance companies and lending institutions) institutional investors. Empirical results from a sample of 2364 unique Indian firms during the 2005-2014 time-period show that, after controlling for firm-level resources and capabilities identified in prior literature, the ownership share of different types of institutional investors is associated with firms’ international investments differently. While pressure-sensitive institutional investors, such as banks and insurance companies, are not supportive of foreign investments by firms, pressure-resistant institutional investors, such as FIIs and mutual funds, are supportive of this strategic decision. Furthermore, our results show that the family ownership in a firm (measured in terms of family shareholding) further lowers the preference of pressure sensitive institutional investors for internationalization, whereas family ownership positively moderates the pressure resistant investors towards internationalization