Diversified Business And Enterprise Performance

Strategic management research and practice emphasize the importance of corporate strategy. Diversification strategy is one of familiar corporate strategies. The relationship between diversification and performance has been a topic issue in strategic management, industrial economics, and finances for 40 years. Unfortunately, there were not consistent results. The research of relationship between diversification and performance begin at the medium of 1990, scholars studied the impacts of diversification degree on the firm performance with samples Chinese listed companies, and have not got consistent results.The major motive of diversification is to pursue synergy. Synergy, also called scope economic, is the combinative value of diversified businesses goes beyond the adding value of each independent business. If diversified firm want to gain synergy, the relatedness between businesses must exist. Scholars regarded that relatedness as the core of diversification strategy; diversified firms with relatedness will get superior performance.There exist several limitations in post empirical studies of business relatedness. The construct of business relatedness were not systematically and comprehensively, researchers usually focused one or few business relatedness, such as product relatedness, manufacturing relatedness, technology relatedness, human resource relatedness, and management relatedness, didn't base on resource and construct business relatedness systematically. Researcher studied the relationship between single business relatedness and performance, didn't explore the fit of different kind of relatedness, and their effect on performance. The distinction and sustain of strategy not only depend on the activity of each business, but also depend on the integration of activities of different businesses. The fit of business activities is one of the oldest strategy ideas. There were not consistency between the construct and measurement of relatedness. Research construct relatedness with resources and business activities, but tested it on the level of industries, the heterogeneity of business resources were not embodied in the measurement. Most of the studies capture the latent relatedness, the potential opportunity of sharing, not the real relatedness, the shared relatedness.The follow is the outline of this article.1. This article is based on the resource theory, construct relatedness form different dimension. This article classifies resource into four types according to functional usages of resource, production resource, technology resource, marketing resource, and management resource. For each resource, can be classified into asset and capability. So there are 8 relatedness, production asset relatedness, production capability relatedness, technology asset relatedness, technology capability relatedness, marketing asset relatedness, marketing capability relatedness, management asset relatedness, and management capability relatedness.2. For each resource, this article analyses the impact of asset relatedness, capability relatedness and their fit on performance. This article analyses the impact of production asset relatedness and production capability relatedness on performance, and their interaction effect on performance; the impact of technology asset relatedness and technology capability relatedness on performance, and their interaction effect on performance; the impact of marketing asset relatedness and marketing capability relatedness on performance, and their interaction effect on performance; the impact of management asset relatedness and management capability relatedness on performance, and their interaction effect on performance.3. For different kind of resource relatedness, this article analyses their fit effect on performance.Firstly, this article analyses the complementary of different 2 resources relatedness. This article analyses the complementary effect of production resource relatedness and technology resource relatedness on performance; the complementary effect of production resource relatedness and marketing resource relatedness on performance; the complementary effect of technology resource relatedness and marketing resource relatedness on performance; the complementary effect of production resource relatedness and management resource relatedness on performance; the complementary effect of technology resource relatedness and management resource relatedness on performance; the complementary effect of marketing resource relatedness and management resource relatedness on performance.Secondly, this article analyses the complementary of production resource relatedness, technology resource relatedness, marketing resource relatedness and management resource relatedness on performance.Thirdly, this article analyses the mediation between different resource relatedness. This article analyses the mediation role of production resource relatedness, technology resource relatedness, and marketing resource relatedness between the relationship of management resource relatedness and performance.4. This article construct measurement items of relatedness and performance, purify items with pilot study of 53 samples, test their reliability, content validity, convergent validity, and discriminant validity with 205 samples.5. This article empirical test the effect of all kinds of asset relatedness, capability relatedness, and their interaction on performance; test the effect of complementary of different two kind of resource relatedness on performance; test the effect of complementary of four kind of resources relatedness on performance; test the mediation role of production resource relatedness, technology resource relatedness, and marketing resource relatedness between the relationship of management resource relatedness and performance. All the empirical results confirm the hypothesis.6. This article concludes the theoretical progresses and managerial implications. Finally, the limitations of this study and the directions for future research were discussed.