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We examine the role of ownership structure on international diversification during institutional transition. We also examine how domestic and foreign ownership, as well as business group affiliation, moderate the performance consequences of international diversification. Our theoretical framework integrates agency and institutional perspectives with internationalization research. We argue that the ownership concentration, along with the identity of owners, will influence firm internationalization. Our results, based on a longitudinal sample of more than 5,000 publicly listed Indian firms during 1990–2005, demonstrate that greater domestic or foreign ownership is associated with a higher level of international diversification by emerging economy firms. Furthermore, a negative relationship emerges between international diversification and firm performance, moderated by the ownership concentration of domestic owners and group affiliation.
