The Effect Of Corporation’s Network On Corporation’s Mode Of Diversification Expasion

If the enterprise wants to achieve its strategic development goals, the first thing is to get all of resources which is needed for implementation of the strategy. Modern economy is in high speed of development, it is very difficult for single enterprise to obtain all the resources needed with its internal capacity, so enterprises must grab resources from the embedded network. Through the company’s life cycle, they will form a variety of network with their suppliers, distributors, and customers, in addition, enterprises also must maintain a good relationship between government and business, industry relations, these relations will also form external network of entrepreneurs. These different networks will bring different resources and information which are needed for the enterprises in the process of diversification of expansion. Based on the theory of enterprise expansion theory of endogenous and exogenous, enterprise diversification expansion mode can be divided into internal expansion and external expansion.This paper mainly studies the influence of different network resource to the mode of diversification expansion, respectively, from the view of organization and entrepreneur, and based on the data of The shanghai and Shenzhen A share market listing Corporation which are from the year of 2009 to 2012. we established the organization network and external network of entrepreneurs, then using the logit model for empirical research.The keys of this paper includes: study the network’s strength, centrality and heterogeneity’s effect on the choice of mode of diversification expansion. Then we divide the entrepreneurs’ external network into vertical, horizontal and social relationships, study the effect of these three dimensions’ impact on the choice of expansion mode.It found that, as a whole, the organization network has positive impact on external expansion, respectively, the stronger the network’s strength, less likely to choose external expansion. After divided the overall sample into two sub samples according to the ownership property, it found that network’s strength has no impact on state-owned enterprises but negative impact on private enterprise. Centrality has positive impact on private enterprise and heterogeneity has positive impact on all kinds of company. It also found that the entrepreneurs’ horizontal connection has significant influence on the company, more horizontal connections, more likely to choose external expansion mode; the entrepreneurs’ social connections has significant negative influence on the company’s expansion mode, more social connections, more likely to choose inner expansion. After divided the overall sample into two sub samples according to the ownership property and took a further examinations, it found that the significance of the entrepreneurs’ vertical and horizontal connections have no change, but the entrepreneurs’ social connections in the state-owned enterprises has negative effect significantly, but has no significant effect in the private enterprise.Finally, this paper gives advises on how to choose the mode of diversification expansion and how to treat the organization network and entrepreneurs network correctly.