Abstract

Does ownership structure affect the decision to establish new ventures (NVs) to diversify? Scholars examining this question in the context of family firms have provided strong evidence to demonstrate the linkages (Denis et al., 1999) and found that since family firms are risk averse, take a long-term view to preserve family wealth (Zellweger et al., 2007), are not only less diversified (Gomez-Mejia et a., 2010), but also fail to create adequate value. Though the importance of NVs in family firms is well documented (Zahra, 2010), there has been no specific attempt to examine the linkage between family firms and their decision to establish NVs to pursue diversification.

This study aims to fill this gap by exploring the NV creation strategies adopted by Indian family business groups during their evolution. Indian stock market is dominated by family business groups that constitute more than 60 percent of the total market capitalization. Understanding the evolution process of these groups and their success/failure strategies can throw light on the future direction of family entrepreneurship in emerging economies.

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