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Foreign Investors, Foreign Directors and Corporate Diversification: An Empirical Examination of Large Manufacturing Companies in India

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Abstract

This study is among the first to systematically evaluate the role of foreign ownership (volume of ownership and board representation) on self-interested strategizing behavior of organizational managers. Building on agency theory, strategic management and organization theory literatures, it argues that the volume of foreign ownership is unlikely to have any bearing on the extent of unrelated diversification that managers pursue. However, the level of foreign representation on the board of directors is likely to dampen such strategies. Results from the empirical examination set in India provide support for this line of reasoning. Contributions, implications and future extensions are explored.

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Authors and Affiliations

  1. Department of World Business, Thunderbird: American Graduate School Of International Management, 15249 N. 59th Avenue, Glendale, AZ, 85306, USA

    Kannan Ramaswamy

  2. Department of Management, California State University, Northridge, 18111 Nordhoff Street, Northridge, CA, 91330-8376, USA

    Mingfang Li

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  1. Kannan Ramaswamy
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  2. Mingfang Li
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Ramaswamy, K., Li, M. Foreign Investors, Foreign Directors and Corporate Diversification: An Empirical Examination of Large Manufacturing Companies in India. Asia Pacific Journal of Management 18, 207–222 (2001). https://doi.org/10.1023/A:1010620008101

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