An Empirical Study Of The Shanghai-listed Diversified Business Strategy And Business Performance Relationship

This thesis empirically examines the effect of diversification on the corporate performance. Such a result implies that the inner performance of centralized firm is higher than decentralized firm, while outer market performance is reversed. And at the same time, diversification has the positive effect on the inner performance related to profit of the non-overdiversified firms, while over-diversification damages both the inner and outer market performance.There are five parts in this thesis: diversification strategy and literature review, analysis on the risk of diversification, discussion about the entry mode, empirical study, discussion and proposal.In the first part, the historical studies of diversification strategy have been reviewed, from the theoretical and empirical pointsIn the second part, the cause why diversification strategy has been taken is also summarized,including new development of technologies,diversified requirements from the society,characteristics of the industry and so on. At the same time, the risks of diversification are also summarized.In the third part, the relationship between diversification strategy and entry mode has been discussed.In the fourth part, 148 listed companies in Shanghai Stock Exchange have been selected. Using these annual reports of sample companies from 1999 to 2002,we have built a statistic model to examine the impact of diversification to the firm performance. Some important results have been acquired accordingly.In the final part, overall discussion has been made according to the empirical results. Some proposals about diversification strategy also have been put forward. Finally, we give advice on the future research.