The Structure Of Chinese Corporate Diversification Strategy And Its Impact On The Corporate Performance

Diversification strategy has been widespread concerned as an important business strategy in last 60 years, and an important topic in corporate strategy management as well. At present, there are a large number of research results about the connotation, motivation, mode of diversification and the relationship between diversification and corporate performance. These scholars have made some valuable research conclusions. Overall, most scholars focused on the product or market level and some one diversification dimension for analyzing the effect of diversification strategy on corporate performance. They ignored holistic analysis of three types of diversification strategy for corporate performance, especially the effects of technological diversification. Obviously, different diversification strategy has an interaction effect on corporate performance. Promoting the synergy of the dimensions diversification may be a good idea to corporate performance development. These enterprises with high performance may pay more attention to the balance and interaction of different diversification dimensions. Moreover, previous research results on technological diversification, mostly more Euroamerican companies, may not be suitable for Chinese. In a dynamic competitive environment, it has important theoretical and practical value in-depth analysis of the structure of diversification strategy and its effect on corporate performance. Based on the existing research results and the practice of Chinese enterprises, we use the panel data from the year of 2005 to 2012 on 112 Chinese manufacturing firms for analyzing the relationship between product diversification, internationalization, technological diversification and corporate performance. The conclusions will help to reveal the mechanism of the Chinese manufacturing firms’ structure on corporate performance.Concretely, we firstly make a brief review on the product diversification, internationalization and technological diversification theoretical research. Then we summarize the enlightenment and deficiency of this paper. On this basis, we analysis the internal construction of diversification strategy, and propose the theory assumption about the relationship between diversification and corporate performance.Then, we establish an econometric model on the basis of these theories postulate, and make the empirical test on the basis of 112 Chinese manufacturing enterprises panel data from the year of 2005 to 2012. We analyze these data with the help of EVIEWS 6.0, SPSS 17.0 and etc.. We find that product diversification has negative effect on the corporate performance. Internationalization and technological diversification have positive effect on the corporate performance respectively. But its interaction not all has significant effect on the corporate performance in general. Compared to the low diversification enterprises, high ones have a higher positive correlation between diversification and corporate performance. In final part, overall discussion about the diversification strategy structure of Chinese manufacturing enterprises 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.