This study examines how diversification in Indian business groups creates multiple forms of agency problems and has performance implications for group-affiliated firms. Departing from prior literature which emphasizes the principal–principal agency conflict in business groups, we argue that business group diversification leads to dual agency problems between controlling and minority shareholders (principal–principal) and shareholders and managers (principal–agent) in affiliated firms. Both these agency problems arise in diversified business groups through cross-subsidization of affiliated firms by inefficient capital investment, continuing presence of affiliated firms in declining industries, tunneling of resources from profitable affiliated firms, lack of attention by business group headquarters to affiliated firms, and affiliated firm managers' sense of perceived security, which negatively impacts affiliated firms’ performance. These agency issues are reduced with the increase in product market competition from exposure to international markets and through concentrated promoter ownership in the affiliated firms. Our hypothesized model finds empirical support in a sample of 828 business group–affiliated firms in India.

本研究探讨了印度商业集团的多元化如何造成多种形式的代理问题，并对集团附属公司的绩效产生影响。与以往强调企业集团中委托人-委托人代理冲突的文献不同，我们认为业务集团多元化导致关联公司的控股股东和少数股东（委托人-委托人）以及股东和经理（委托人-代理人）之间的双重代理问题。这两个代理问题都出现在多元化的业务集团中，通过低效的资本投资对关联公司的交叉补贴，关联公司在衰退行业中的持续存在，从盈利的关联公司挖出资源，业务集团总部对关联公司缺乏关注，以及关联公司经理的安全感，这对关联公司的绩效产生负面影响。这些代理问题随着产品市场竞争的增加而减少，因为接触国际市场和通过对附属公司的集中发起人所有权。我们的假设模型在印度 828 家企业集团附属公司的样本中找到了实证支持。