Entrepreneurial Social Capital Research, Corporate Diversification Strategy And Performance Impact

Diversification can be one of indispensable strategy choices for every growing enterprise. In recent years, resource-based view (RBV) throws wholly new light on the study of diversification strategy, and strategic theory building on RBV turns out to have a sound explanation in western. However, under the context of an emerging market or a transition economy in China, new elements are needed for the development of the study on diversification strategy based on RBV. Currently, the market economy in China is still too young, diversification decision of enterprises is not only influenced by internal resources, but also entrepreneur's resource acquisition network ties. Thus, it is necessary to incorporate entrepreneur's social capital in the research framework of diversification strategy based on RBV.Following the RBV, this paper firstly defines entrepreneur's social capital as business network resource, support network resource and resource mobilization ability on the basis of a comprehensive literature review. It then makes a contribution by developing a conceptual framework in a "resource-strategy-performance" model and proposing corresponding hypotheses. In the conceptual framework, the relationship among entrepreneur's social capital, diversification strategy and corporate performance is systematically characterized. Finally, SEM analysis is conducted using questionnaire survey data from Chinese firms.According to the SEM analysis results, entrepreneur's social capital, as individual unique character of entrepreneur, has great impact on the diversification strategy decision of enterprises. Specifically, business network resource, support network resource and resource mobilization ability can have a positive influence on related diversification of enterprises, while support network resource and resource mobilization ability have a positive influence on unrelated diversification of enterprises. Meanwhile, the findings suggest business network resource and support network resource can enhance corporate performance, whereas resource mobilization ability is irrelevant to corporate performance. Moreover, related diversification is proved to be positively related to corporate performance, but unrelated diversification can be negatively related to corporate performance.