Differential Role of Interlocks on Strategic Change in a Business Group: Theory & Evidence
Despite renewed interest in business groups, a key issue hitherto has been the treatment of all business group affiliated firms on par. In this work, we follow the increasing calls to treat different affiliates of the same group as heterogeneous entities. Classifying interlocks of an affiliated firm with another firm in the same group as internal and other interlocks as external, we explore the impact of these interlocks on two aspects of strategic change: variation (i.e., with respect to time) and deviation (i.e., with respect to industry average). We suggest that internal interlocks reduce, while external interlocks increase strategic variation whereas both the interlocks increase strategic deviation. We find support for both our hypotheses on internal interlocks but not for the one on external interlocks with respect to strategic deviation. We conclude with implications for scholars in the areas of business groups as well as those in strategic change.
|Journal||Academy of Management Proceedings|
|Publisher||Academy of Management|