David Knoke Dalhia Mani University of Minnesota-Twin Cities
SES-0833048 David Knoke Dalhia Mani University of Minnesota-Twin Cities
A business group is a set of legally independent firms that coordinates actions. Coordinated actions include intra-group transfers of key personnel, knowledge, capital, and supplies. Business groups are characteristic of most economies in the world, and control substantial portions of most national economies. Prior research describes business groups as murky, corrupt, and highly entrenched within networks of ties. However, the mechanisms by which highly entrenched business groups' exercise their position in a network of ties are unclear. In addition, the investigator's research on the shareholding network of all publicly traded Indian firms' shows that business groups occupy diverse network positions. While some business groups are highly nested within the network, most are isolates or marginally nested within the network.
Nestedness is defined as the number of actors or ties that need to be removed to split an actor or a cluster of actors from the rest of the network. For instance, in the Indian shareholding network, initial research shows that to split a highly nested business group from the rest of the network requires the removal of a minimum of 24 ties. In contrast, marginal business groups split away from the rest of the network when one or two actors or ties are removed. Nestedness reflects network position, and is the result of multiple ties formed by multiple actors over time. For instance, in the Indian shareholding network, isolate business groups can move to a highly nested position only if they form a minimum of 24 ties with key actors in the network. Hence nestedness is not susceptible to short term manipulations by managers. Indeed, managers are unlikely to be aware of their group's position in the network. Nestedness might instead manifest itself to participants in the network as taken for granted sets of opportunities, constraints, and ways of doing business that differ for different actors in the network. The dissertation research addresses the following question: How do highly nested business groups differ from isolated or marginal business groups in the opportunities and constraints available to them?
The investigator will address the research question through data collected from semi-structured in-depth interviews with Indian business group managers and owners. Interviewees will be asked to relate instances of how their group perceived and responded to opportunities and threats in the environment. Interviews will be analyzed to uncover thematic differences and similarities between the responses of actors at different positions in the network. Theoretically this research is important because it gives us insights into the mechanisms by which network position influences behavior in the context of Indian firm ownership networks. Future research can then compare how nestedness manifests itself in other large networks. Also, sets of firms that operate in tandem are a powerful but understudied phenomenon. The research helps uncover how these clusters of firms operate and influence the economy. The practical importance is for policy makers, investors, and activists concerned about the influence of highly connected business groups on the economy. Research findings may enhance our ability to provide lecture on and better understand the Indian economy. To obtain interviews, the co-PI is also establishing affiliations with universities and corporate governance bodies in India.
