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Diploma Thesis from the year 2008 in the subject Business economics - Economic Policy, grade: Distinction, London School of Economics (Management and Strategy Group), course: Dissertation Master of Science in International Management, language: English, abstract: The conglomerate structure is still prevalent in India. Recently, however, consultants and international investors have started pressuring business houses to reduce diversification.Focusing on India's most diversified conglomerate and a benchmark portfolio of unaffiliated Indian firms, this study examines the impact of Tata Group…mehr

Produktbeschreibung
Diploma Thesis from the year 2008 in the subject Business economics - Economic Policy, grade: Distinction, London School of Economics (Management and Strategy Group), course: Dissertation Master of Science in International Management, language: English, abstract: The conglomerate structure is still prevalent in India. Recently, however, consultants and international investors have started pressuring business houses to reduce diversification.Focusing on India's most diversified conglomerate and a benchmark portfolio of unaffiliated Indian firms, this study examines the impact of Tata Group affiliation on firm performance. Results show a significant positive relation between group membership and performance, both in terms of Tobin's q and ROA. Differentiating between different degrees of group affiliation(DOA), the analysis further reveals that the higher the influence from the centre, the higher the positive impact on firm performance. From all analyzed DOA factors, the inclusion of senior group level executives or Tata family members in the management of affiliates seems to boostaffiliates' performance the most. A possible interpretation of this finding is that direct managerial involvement from the centre increases firms' access to group level resources. Furthermore, group level executives are matured professionals and leaders, who bring in valuable businessknowledge, thereby increasing the long-term prospects of the affiliate and evoking trust among investors. Overall, the findings of this paper suggest that even in a more liberal and globalized India, the conglomerate structure can still be financially beneficial and is far from outdated. TheTata Group is one such positive example.
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