"Diversification, Internationalization and Institutional Context".

Summary This study investigates the role of institutional context in the strategy-performance relationship for Chinese business groups, particularly for diversification and internationalization. Theoretically, by demonstrating the current developments in China regarding political systems, market openness, product, capital and labor markets, we deepen the understanding about how institutional voids and institutional transition in the Chinese market shape the strategic behavior of Chinese business groups. Empirically, based on 186 observations of Chinese business groups from 2008 to 2010, we found that: (1) For both domestic and multinational groups, unrelated diversification is shown as having a destructive effect on performance. (2) Related diversification is profitable for domestic business groups. (3) Conversely, multinational business groups should increase their specialization level to outperform in the international market. Furthermore, for the internationalization-performance relationship, we found an inver.