Based On The Resource Concept Of Corporate Diversification Strategy Selection And Its Synergies Research

While stepping into the new century, a changeable and uncertain environment is surrounding Chinese firms. In 2001, China signed WTO contracts into law. It provides not only much more opportunities but also competitive forces or risks for Chinese firms. Furthermore, the historic reforms on Chinese finance fields, such as capital market, currency policy etc. are going now. It will enhance the uncertainty in operating for inner corporations. So, Chinese firms are trying to seek for expanding their sizes and improve their profits to survive the inner and outer competitive markets. Under this circumstance, more and more Chinese firms are choosing businesses diversified and regarding it as a quick and effective way for expanding their sizes and enhance their strengths.Here, on the basis of summarizing the related research and literatures on business diversity and its effectiveness by foreign and national scholars, considering the status of diversified moves by Chinese firms, we put forward the logic hypothesis among resources held by firms, diversity and performance based on the resource-based views. For the dynamics of strategic decision, related and unrelated diversity are divided. At the same time, we enrich the definition of firm performance and then build the conceptual model of the relations of resources, diversified moves and performance.Empirical analysis is applied here. We gathered 360 annual finance reports from 60 listed corporations with continual 6 years finance and other data as samples in Chinese manufacturing industry. During the research, we build SEM to test the theoretical model and hypotheses proposed in the paper. Then, Lisrel is used for debugging and obtaining the best model parameters. The result certificated that the sample data are fitted with theoretical model preferably. By analyzing the factors and their interrelations of the model, we proposed some practical advices about businesses diversity for the Chinese listed firms in manufacturing industry. Main conclusions are as follows:First of all, physical resources are responsible for the related diversity action of listed firms. The model effectively predicts therelated diversity action by firms.Second, the empirical results reflect that intangible resources cannot explain the related diversity decision significantly. It is possibly because Chinese firms scarcely invest in R&D or other intangible resources accumulation. So the data could not fit the hypothesis well.Third, slack financing capability or resources have significant influence on the unrelated diversity action.Fourth, the synergy is produced by the related diversification action evidently. In the low-profitable firms, the related diversification improved the resources efficiency. And in the high-profitable firms, the whole profitability is significantly increasing by the level of related diversification.Finally, the synergy is also produced by the unrelated diversification action. In the low-profitable firms, the unrelated diversification improved the resources efficiency clearly. And in the high-profitable firms, the unrelated diversification resulted in better performance than before.So, the resource-based views explain the businesses diversified actions by Chinese listed firms in manufacturing industry well. At the same time, the empirical evidence illustrates that whether the related or unrelated diversification results in consuming less resources or making better profits. That is synergy.