| Abstract |
The paper investigates the strategic reallocation of resources by business group (BG) affiliated firms during times of reduced uncertainty in emerging markets. Using a Triple Difference method, we examine the response of BG-affiliated firms along historical, sectoral, and regulatory embeddedness to institutional voids. We find that BG-affiliated firms with exposure to past uncertainty and operating in sectors dependent on stable institutions reduce diversification more than their counterparts, while BG-affiliated firms embedded in regulations increase diversification more than their counterparts, viewing the reduction of uncertainty as an opportunity to secure a diversified portfolio through enhanced rules of control. |