Research On Corporate Diversification,resource Allocation And Wealth Distribution Based On DEA

Corporate diversification,resource allocation and wealth distribution have always been important research topics in the field of business administration.This paper studies these issues from the perspective of productivity(efficiency)based on Data Envelopment Analysis(DEA)and provides new ideas for management research and valuable reference for managers.Although corporate diversification is considered to be a basic strategy for companies,the relationship between diversification and firm performance seems to be inconclusive in the existing literature.In the management literature,scholars study the diversification strategy and its impact on performance according to Resource-Based View(RBV),and the conclusions are inconsistent.The finance literature analyze this problem mostly based on agency theory,and find that diversification is negatively correlated with firm value.Actually,firms diversify to save costs and share resources,thereby generating synergies between business units.That is,we hope to minimize inputs(i.e.,resources and cost)and maximize outputs(i.e.,profit and revenue),which increases efficiency.Therefore,we study the relationship between diversification and firm performance through efficiency.First,the impact of efficiency on the relationship between corporate diversification and firm performance is analyzed.After classifying diversification into related and unrelated,we study the relationship between diversification and efficiency,and how efficiency impact firm value.Second,we also studied the problem of resource allocation in diversified firms through efficiency.We propose a corresponding DEA model for diversification to help diversified firms to more accurately assess firm and segment efficiency and reallocate resources between segments for better firm performance.After studying the allocation of resources,we also studied the issue of wealth distribution of firms.Efficiency changes expressed in the Malmquist index can also be used as a measure of corporate wealth growth to deal with the issue that whether employees can benefit from the firm improvement Although there are researches on pay-performance in the management literature,there are few researches on how firm performance impact employee benefits from the perspective of wealth distribution.Therefore,we study whether the stakeholders,especially employees,can benefit from the wealth created by firm improvement.In general,there are obvious advantages to study these issues from the perspective of productivity.For example,productivity is more suitable for the RBV theory in firm diversification,and it can more effectively allocate resources to different businesses.Productivity growth can also estimate the company's wealth growth,which helps us to better understand the wealth distribution problem among stakeholders in the firm.The research contents and the main conclusions of this paper are as follows:First,this paper examines how efficiency matters.in the relationship between corporate diversification and performance.It investigates the relationship between related and unrelated diversification,then examines the relationship between efficiency and firm value in the sample of 85,123 firm-year US firms.Our paper also found that related diversity exhibits an inverted U-shaped relationship with efficiency,while unrelated diversity exhibits a U-shaped relationship with efficiency.In addition,we find that efficiency exhibits a U-shaped relationship with firm value.Overall,results demonstrate that efficiency plays an important role in the study of diversification.Second,in order to more accurately assess productivity in diversified firms and efficiently allocate resources between segments,we use proposed models based on data envelopment analysis to measure a diversified firm efficiency and allocate resources,empirically test the models using a sample of U.S.public firr for period of 2012-2016.The results show that in comparison with conventional DEA models,our model provides more useful productivity expression for diversified firms,and that the model-suggested resource reallocation is linked to better firm performance.In addition,by conducting a large sample survey of US companies for studying whether employees can benefit from the firm improvement,we find evidence that firm productivity improvement does benefit employees.The distribution of wealth to employees from productivity improvement varies between capital and labor intensive industries.Such distribution is also influenced by firm characteristics such as R&D intensity and size.Comparatively,the distribution of wealth to employees from productivity improvement is slightly lower than the distribution to top management teams,but higher than that to shareholders.Our findings could significantly contribute to the understanding of the employee benefits and wealth distribution issue,and provide valuable strategy references for firm managers.