The relationship between ownership and diversification has been the focus of renewed debate between financial economists and strategic management scholars. While financial economists hold that manager‐controlled firms tend to reflect higher levels of diversification, strategy researchers argue that ownership and diversification are not systematically related. In throwing light on this debate, this study uses a fine‐grained definition of ownership groups to explore how the different objectives and monitoring predispositions of distinct ownership groups might influence diversification strategy. The empirical examination is set in India to offer a striking contrast from the predominantly U.S.‐based studies that have shaped the ongoing debate. Findings show that diverse ownership groups adopt different postures in monitoring and/or influencing organizational diversification. While some ownership groups are closely associated with focused strategies, and some encourage diversification, others are quite indifferent. These results suggest that the context‐specific variation among ownership groups is germane to our understanding of diversification strategy. Copyright © 2002 John Wiley & Sons, Ltd.

This article documents that blockholders with both ownership and management control in family firms have different goals compared to blockholders with only ownership (but no management) control. We theorize and find evidence that family controlled and family managed (FCFM) firms negatively moderate the relationships between internationalization and governance mechanisms, while family controlled and nonfamily managed (FCNFM) firms do not. The findings indicate that family owners in FCFM firms have greater opportunities to reap private benefits of control indicating the presence of secondary (principal-principal) agency problems, while these problems are mitigated in FCNFM firms. In emerging economies like India where family firms are ubiquitous, they highlight the need to recognize differing blockholder influences on internationalization-governance relationships and to develop more nuanced theorizing for understanding them.

No abstract

Using data on 200 large U.S. corporations in 1996, this study develops and tests a model in which the Compensation of Outside Directors is significantly related to Director Effort, External Monitoring, Internal Referents and Firm Performance, after controlling for Firm Size and Inside Ownership. There is some support for each set of hypotheses relating to the different independent variables in the model.

No abstract