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Diversification and diffusion: A social networks and institutional perspective

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  • Nan Zhou
  • Andrew Delios

Abstract

We examine the diffusion of a major firm strategy, unrelated diversification, among a population of Chinese listed firms during the 1991 to 2002 period. We propose that a firm’s social network can serve as both an information disseminator and a channel of influence in the diffusion of the diversification decision. Further, we investigate how the institutional environment alters the role of a network over time. We find that firms are more likely to diversify into conglomerates if (1) they occupy a central position in the network; (2) they have higher levels of government shareholding; and (3) the firms with which they have network ties diversify. Moreover, as the institutional environment strengthens over time, the influence of a firm’s network partners decreases. Consistent with these results, we contend that diversification is not only a response to economic and agency concerns, but also a function of the social and institutional context in which a firm is embedded. Copyright Springer Science+Business Media, LLC 2012

Suggested Citation

  • Nan Zhou & Andrew Delios, 2012. "Diversification and diffusion: A social networks and institutional perspective," Asia Pacific Journal of Management, Springer, vol. 29(3), pages 773-798, September.
    • Handle: RePEc:kap:asiapa:v:29:y:2012:i:3:p:773-798
    DOI: 10.1007/s10490-010-9242-4
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    3. Bilgili, Tsvetomira V. & Kedia, Ben L. & Bilgili, Hansin, 2016. "Exploring the influence of resource environments on absorptive capacity development: The case of emerging market firms," Journal of World Business, Elsevier, vol. 51(5), pages 700-712.
    4. Hongjuan Zhang & Rong Han & Liang Wang & Runhui Lin, 2021. "Social capital in China: a systematic literature review," Asian Business & Management, Palgrave Macmillan, vol. 20(1), pages 32-77, February.
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    7. Robert E. Hoskisson & Mike Wright & Igor Filatotchev & Mike W. Peng, 2013. "Emerging Multinationals from Mid-Range Economies: The Influence of Institutions and Factor Markets," Journal of Management Studies, Wiley Blackwell, vol. 50(7), pages 1295-1321, November.
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