A Study On The Performance And Influencing Factors Of Diversification Of Chinese Enterprises

The diversification of enterprises, also known as diversified operation and multiplex operation, is the diversified categories of product manufactured by enterprises. The diversification is general adopted as a kind of development-oriented strategy, when the modern enterprises have reached to a certain level, and is an operational behavior to acquire more sustainable development and more profits. The diversification is applied extensively in the aspect of enterprise practice both at home and abroad; diversification strategy has been the important research field as one of the hot topics in theory circle and practice field in the aspect of theory research and practice exploration.Which is better, diversification or professional management? Such arguments can be found in various books and periodicals. In academic and theoretical circles, the "premium theory","depreciation theory", and "eclectic theory" on diversification held by domestic and foreign scholars have their individual opinions, with the lack of convinced or relatively consistent conclusions. The mainstream opinion in the foreign and domestic academic circles holds a severe critical attitude towards diversified business operation, considering the diversification having seriously damaged the value of the corporations. In the business circles, American diversification enterprises have begun to clean up the non-core business since the1980s, showing a "refocusing" trend. Diversified operation in the enterprises of emerging economies has encountered severe difficulties and setbacks, presenting a contractive trend.Currently, some Chinese enterprises are keen on diversification. Why do Chinese enterprises dare to operate against the international "refocusing" trend? It produces three theoretical contradictions: the first contradiction between Chinese enterprise diversification phenomenon and academic theory, the second contradiction between Chinese enterprise diversification phenomenon and "refocusing" trend in the United States, and the third contradiction between Chinese enterprise diversification phenomenon and contractive trend in emerging economies. In order to solve these three contradictions and reveal the logics and factors behind the phenomenon of Chinese enterprise diversification, the author began a study in this dissertation.In view of the above-mentioned research background, the author arranges the research following the paradigm of "strategy-performance-influential factor" proposed by Hoskisson and Hitt (1990), and pursuant to the logical thinking sequence of "observing economic phenomena, asking questions, making theoretical analysis, conducting empirical test, drawing conclusions, making recommendations ".Based on the operating environment with distinct Chinese characteristics where the Chinese enterprises survive, the dissertation tries to solve two questions:the first is to research the impact to diversification degree of Chinese enterprises on the performance, response for the application of diversification performance theory on Chinese enterprises; the second is to research the influential degree of Chinese characteristic elements on the diversification performance of Chinese enterprises, revealing the mechanism of these influential factors, explaining the contradiction between Chinese enterprises diversification and the "refocusing" trend in the United States, and the contraction between Chinese enterprise diversification and contradictive trend in emerging economies. Thus it contributes to provide more suggestions on the building of diversification theory more suitable for Chinese enterprises and offer beneficial reference and enlightenment for the decision making of entrepreneurs for diversification.The dissertation, comprehensively using the knowledge of some subjects such as management, economy and accounting, conducts theoretical analysis and empirical study combining quantitative and qualitative analysis targeting at the performance of diversification and relevant factors influencing the performance by research methods of literature theoretical research method, sampling survey method, questionnaire method and mathematical statistics.The dissertation is divided into six chapters. Chapter I is the introduction, starting from the research background, clarifying research questions and research methods, and then proposing research innovation points. Chapter II is the literature review, reviewing and sorting out the theoretical and empirical literature on Chinese and foreign enterprise diversification, so as to provide related theory and empirical methods as support for the following content. Chapter Ⅲ reviews the development process of diversification of domestic and foreign enterprises, conducting comparative analysis on commonalities and differences between domestic and foreign enterprises diversification, and extracting of the Chinese enterprise diversification characteristics. Chapter IV makes empirical research on diversification performance of Chinese enterprises, by selected the sectional operational data of322listed companies on Shanghai Stock Exchange and Shenzhen Stock Exchange in2012, demonstrating the relationship between the degree of diversification of Chinese enterprises and performance through the perspective of financial analysis, so as to verify the relevant academic suitability for Chinese enterprises. Chapter V offers the empirical research of the factors affecting the diversification performance of Chinese enterprises, demonstrating various factors affecting diversification performance of Chinese enterprises through questionnaires and interviews with executives in the method combining quantitative and qualitative analysis, and revealing the influential mechanism from these factors. Chapter VI summarizes the conclusions and puts forward the study revelation and research prospects.Through systematic demonstration, following conclusions are obtained:(1) The diversification in Chinese enterprises is a universal phenomenon, and quantity of the industries engaged in is within the range from2to4, mostly belonging to unrelated diversification. Impacted by the special economic system and enterprise system in China, diversification of Chinese enterprises does not fully comply with the U.S. diversified enterprise "Specialization-Diversification-Refocusing" evolution trajectory, and it has some differences from enterprise diversification development path in emerging economies, being with the evolution trajectory suited to special elements of the Chinese characteristics.(2) The diversification behavior of Chinese enterprises has distinct Chinese characteristics, adapting to "semi-market, semi-control" environment in China, and being closely related to Chinese enterprise’s seeking investment development opportunities and the development of China’s capital markets, affected by the dual effects from market and non-market factors. The performance of Chinese enterprises diversification is constrained by development opportunities, capital markets, policy interventions and other factors outside the enterprise as well as affected by the corporate governance, financial platform, management effectiveness and other factors inside the corporation; the impact from external economic factors is slightly heavier than that of the internal economic factors.(3) The degree of diversification of Chinese enterprises shows a negative correlation to the performance on the whole, which is in line with diversification "depreciation theory". The performance of professional business is superior to that of diversified business, related diversification business performance is better than unrelated diversification enterprises, but not providing significant positive effect on promoting the performance, while unrelated diversification plays a significant negative effect on the performance.(4) Chinese diversified corporations are generally weaker than professional enterprises in competitiveness in the segment market, relying on resource integration advantages in the engaged industries to compensate for competitive disadvantages in the professional segment markets. Chinese enterprises’diversified operation is the objective need for industrial development, such as to integrate industrial chain, to upgrade industries, to expand financial capacity, to obtain investment profits and so on, but also a tool to suit the effects from non-market factors and to pursue the system rent-seeking in economic field.