The Research Of The Diversification Strategy Of Listed Companies In China’s Influence On The Growth

This paper aims to provide a reference for the development strategy of middle and small-sized enterprises(SMEs) by studying enterprise diversification as well as the relationship between diversification and growth of SMEs in China’s listed companies. For the definition of SMEs, this article is in reference to foreign experience and our country’s own classification standard on SMEs.First of all, on the basis of the review of domestic and foreign literature, this paper describes the growth theory and diversification theory of SMEs as well as the current situation of the relationship between business growth and diversification, and then it makes a theoretical analysis from the perspective of the diversification’s impact on the business growth.Secondly, when evaluating the growth of the company, it adopts approaches of factor analysis and principal component analysis(pca), and makes a comprehensive study from the four aspects: profitability, scale expansion ability, operation capacity and cash flow growth ability. This paper chooses 136 small businesses as sample which listed before December 31, 2012. By empirical researching, it found the particularity of diversification degree, and revised the Rumelt specialization ratio’s division standard on diversified types. It also determines specialization ratio and Herfindahl index as a measure of enterprise diversification approach.Finally, in the empirical analysis part, this paper uses the descriptive statistical analysis and regression analysis in order to compare the different degree of diversification for the growth of SMEs. Besides, it segments specifically of the diversity of different types, including overall diversification, related diversification and unrelated diversification. and then it respectively analyzed their influence on the growth of SMEs. The results from regression analysis are as following: First, for small and medium-sized enterprises, the higher the degree of diversification, the lower the enterprise growth; Second, unrelated diversification and corporate growth was negatively correlated, and the impact of related diversification and specialization on business growth is uncertain. For related diversification, it is conducive to the formation of scale effect, thus more conducive to the development of enterprises because companies are engaged in the associated business; Third, coefficients of asset size in the test of significance are negative, which indicates that the higher the asset size, the greater the size of the business, but the lower of the growth. This performance is due to a low cardinal number of SMEs in the initial stage, thus they often exhibit a very high growth.