4.6 Com pany owners hip
This category contains six papers (6.38 per cent) that focus on the ownership of
Indian companies. Owing to the social and economic differences in India, it is a
straightforward matter to distinguish between companies in this country in terms of
management and competitiveness (Lasserre and Schu¨ tte, 2006).
The topics included in this category examine how the ownership structure influences
management, strategy and firm performance. Douma et al. (2006) examine the ownership
structure and provision of scarce, inimitable resources to explain differences in firm
performance. Although it is uncertain what impact foreign institutional investors have
on firm performance, it is important to distinguish between foreign portfolio/institutional
ownership and foreign direct/corporate ownership, in particular in emerging economies
which are characterised by increasing external capital inflows. Ramaswamy et al. (2002,
2004) stressed the relevance of country context in determining the dynamics of
diversification strategy. The incidence of family ownership, salience of social ties
between CEOs and directors on the board and the unique selection mechanisms at play in
choosing directors are all vitally important in influencing corporate governance practice
in family-owned Indian companies. Moreover, ownership structure impacts on the
decision of Indian firms to undertake outward FDI. Family firms and firms with
concentrated ownership are less likely to invest overseas (Bhaumik et al., 2010).
The last two papers examine how ownership structure and competitive rivalry
affect performance. These papers conclude that CEO personality enhances or inhibits
strategic flexibility (Nadkarni and Herrmann, 2010) and that a rise in competitive
intensity has a greater effect on the magnitude of the differential results of private
companies compared to SOEs (Ramaswamy, 2001).