Research On The Motives Of Non-related Diversification And Performance Of Small And Medium Enterprise Board Listed Manufacturing Companies

The development level and scale of manufacturing industry is one of the important symbols to measure a country’s comprehensive national strength, and the manufacturing industry of China has made a substantial progress in the past three decades, which also has made a huge contribution in the development of national economy. Nevertheless, most of manufacturing companies in China are low value-added enterprises and labor-intensive enterprises, and due to the major change of the macro operating environment, most of the companies have operating difficulties and are faced with confusion about strategic choices, for example, whether to continue specialization or diversification, whether to continue related diversification or non-related diversification.There are many achievements in the research on the motives and performance of enterprise strategic behavior; however the research samples are from different operating environment, consequently there is no consistent conclusion about related diversification/non-related diversification discount, premium or irrelevant. Considering the current special macro operating environment in China, and the SMEB listed manufacturing companies are definitely outstanding representative in manufacturing industry, the study has a certain practical significance.The paper is organized according to the framework of ‘motives-strategy-performance’, through literature research, after current special macro operating environment analysis and case analysis and then put forward the research hypothesis; the paper also selects the historical data from 2011 to 2013 of 64 non-related diversification listed manufacturing companies from SMEB, to do empirical analysis via EXCEL 2010 and SPSS 20. The research findings shows that there is a negative correlation relationship between the free cash flow of the enterprise, ownership concentration, executives’ wage rates and enterprise’s non-related diversification, and there is no significant relationship between enterprise’s non-related diversification and enterprise performance. After the empirical analysis, the paper has analyzed and summarized the research findings, in order to provide reference for small and medium-sized enterprises’ diversification strategy decision.