Study On The Relationship Between Dominant Business And Performance Of Diversified Enterprise

The history of enterprise groups in developed countries indicated that diversification was one of the most important ways for groups to grow continuously. In the day of the marketing competition is more and more seriously, how to carry out diversification strategic is an important question for Chinese enterprise groups which must be solved immediately. Among the numerous factors influencing diversification, the paper selects the dominant business as the point to study diversification of Chinese enterprise groups. Defining the Outstanding degree of dominate business to reflect the status of dominate business in the diversified enterprise and the recourse's decentralization and centralization in each business thereby deterrnining that the measuring degree method based on Herfidahl index is the best Based on the deeply theoretical analysis, a sample of 149 Chinese listed companies in 2002 was selected to study empirically the impact of dominant business on the diversification performance, in the circumstance that the whole strength of the enterprise groups is opposite weak, adopting the mode of standing out the dominate business will achieve the better performance, but if the enterprisestrength is very strong, then the dominate business standing out or not is not the main factor influencing diversification performance. The study also found out that the performance of dominate business has negative relationship with diversification performance, has negative relationship with diversification risk. This shows that the dominate business has great influence on the diversification, which is the assurance of a successful diversification, but too high growth speed will increase the diversification risk.