Training for Internationalization through Domestic Geographical Dispersion: The Case of Emerging Market Business Groups

Traditionally created to deal with the unfriendly domestic environment, business groups (BGs) are increasingly internationalizing. However, how BGs can reconcile their strictly domestic orientation with an international dimension still remains an open question. Drawing on arguments from organizational learning, we seek to solve this puzzle in relation to the internationalization of Indian BGs. In particular, we argue that in heterogeneous domestic emerging markets BG’s geographical dispersion across sub-national states provides training for internationalization. To internationalize successfully, BGs need to develop the capability of managing geographically dispersed units in institutional heterogeneous contexts. Domestic geographical dispersion would indeed help the BG dealing with different regulations, customers and infrastructures. However, there is less scope for such training as BGs become
more internationally experienced, and the benefits of domestic geographical dispersions are limited by the degree of urbanization of sub-national states. We test our argument on a sample of 693 Indian BGs over the period 2001-2010.