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We integrate agency theory and extended resource-based view (ERBV) to examine the impact of business group heterogeneity on the performance of the business group affiliated firms.

The differential ownership structure of business groups (degree of ownership by the promoter, domestic institutional and foreign institutional investors) determines the effect of intergroup heterogeneity, and the differential directors' interlocks (strength and type of directors in the interlocking arrangement) with the affiliated firms assess the impact of intragroup heterogeneity. Acquisition performance is operationalized through cumulative abnormal returns to the acquirer upon acquisition announcement and is computed using the standard event study methodology.

With 476 domestic and cross-border M&A deals announced in India between 2005 and 2021, our findings indicate that the firms affiliated with foreign and promoter-owned groups received positive announcement returns. Furthermore, the type of directors and the interlocks formed therein matter for an affiliated firm. While the affiliate’s executive and the non-executive non-independent directors on the board raise agency issues and negatively impact its performance, the independent directors mitigate them. Further, the market negatively views the interlocks formed by affiliated firms' non-executive, non-independent directors who undertake independent positions in other affiliated firms, as indicated by the negative announcement returns.

To the best of our knowledge, this is the first study to examine the impact of intergroup ownership heterogeneity on the acquisition performance of affiliated firms. Further, evaluating the effect of the type of interlocks in addition to strength is a distinctive feature of this research. This novel aspect of the study attempts to further understand the corporate governance of business groups and its implications, an area often referred to as the “black-box” in the business group literature.

This case enables students to understand the nature of a typical crisis and manage a crisis drawing insights from the protagonist handling of the crisis and from the various crisis management models in the literature. The rich description of the impact of COVID-19 pandemic on the world in this case enables students to understand the nature of a typical external crisis. The critical appraisal of the protagonist’s plans and actions to overcome the crisis enables students to appreciate the various crisis management frameworks or models. In addition, students get perspectives about the leadership skills and competencies required during a crisis. In this way, students will not only learn about the theoretical concepts related to the crisis but also the practical know-how to effectively handle the crisis.

This case study describes the functioning of the International Delhi Public School (IDPS) Akhnoor, Jammu, and Kashmir, India, through the COVID-19 global crisis. The IDPS academic operations were disrupted because of the COVID-19 global crisis in March 2020. The protagonist, KCS Mehta, the school principal of IDPS, faced with the crisis, takes various steps to ensure the smooth transition of school’s academic operations from the physical mode to the online mode. This case explains the nature of an external crisis that completely crippled the organization’s day-to-day operations and how the organization’s leader tried to manage the crisis to revitalize the organization’s operations. The case can be used for teaching of alternate Models of Crisis Management and Change Management.

The case is developed to teach the courses of Executive training programs and MBA programs in business schools.

Teaching notes are available for educators only.

CSS 11: Strategy.