On The Effect Of Refocusing Of Chinese Listed Corporations On Performance: A Competitive Advantage Perspective

In recent years, the re-focusing strategy of diversified enterprise causes the wide attention of academic group. However, the results of study are not consistent, some scholars believe that corporate diversification is premium; some ones believe that business diversification is discount, and others believe that business diversification has no relationship with corporate performance. This article attempts to analyze the relationship from a perspective of whether establishing competitive advantage or not, which can find out the bridge connected the different conclusions, and then provide a complete and unified explanation for the different conclusions.Using the data from annual report that Chinese listed firms announced between the years 2006-2008, this article screens out 74 listed corporations that fit the definition of re-focusing to form the sample. The paper takes the largest volume of operation revenue as a measure indicator of core activity. The article takes the difference between return on equity of a firm and return on equity of industry to be a measure indicator of competitive advantage of the enterprise. The paper takes the earnings per share to be a measure indicator of corporation performance. Then the paper makes an empirical study into the relationship between the level of refocusing operation and corporate performance.At last,using a refocusing operation case of listed company to explain the topic.Studies results show as followings: the Chinese listed corporations carry out the refocusing operation based on the companies'own core activity, Chinese listed corporations does not strip their business at will in spite of the decrease of corporate performance due to over pluralism, and in other words Chinese listed corporations are rational when they are re-focusing. Studies also highlight that the poor returns problem could not solved by conducting refocusing itself. Only reinforcing the competitive advantage of enterprises at the same time of refocusing can it promote their performance.To sum up, in the field of promoting performance, pluralism is not all invalid, and refocusing is not all valid. In the final analysis, the competitive advantage that comes from core competitiveness determines the success or failure of business strategy.