A Study Of Diversification Strategy Decision Based On Top Managers’ Cognition

Diversification strategy is a kind of development strategy in the process of enterprise development. However, due to the environmental changes, enterprises are faced with great uncertainty, most enterprises are often difficult to achieve its strategic objectives through diversification, and many enterprises appear to decline or even bankruptcy because of diversified development. From the existing research results of diversification and enterprise performance, the majority of scholars believe that the diversification of development will reduce the value of the enterprise, damage to the interests of shareholders. In spite of the failure cases of diversified development in practice, the academic circles and the social circles generally hold the attitude to the diversified development, but there are still a large number of companies are implementing or trying to implement the diversified development strategy. Therefore, the reasons for the diversification of enterprises have become the focus of the scholars and the society. At present, the research on enterprise diversification motivation is based on the complete rational hypothesis, from the three aspects of economic rationality, individual rationality and organizational rationality, but the conclusions are very different.This research is based on the hypothesis of bounded rationality, and tries to study the diversification strategy from the perspective of top manager’s cognition. In this study, the research object is the Hodo Group and YOUNGOR Group, using the case study method, combined with the cognitive structure and cognitive process of senior managers, establish a research framework of the relationship between the corporate environment executive cognition, organizational learning and corporate diver-sification strategy. Using the interview record of the case enterprise executives, the text of the speech, the company internal archives, the external documents and other multiple data set up case database, analyze the cognitive mechanism of enterprise diversification strategy decision.The main research conclusions as follows: The top managers’ cognition plays a key role in the decision-making of enterprise diversification strategy. Executive cognitive flexibility affects enterprise’s environmental adaptation ability and information acquisition ability and cognitive complexity can help executives more comprehensive and in-depth interpretation environment and their interaction affects the diversification strategy and decision-making of the enterprise. Corporate executives search for creative and strategic significance to construct the cognitive process is to break the development of path dependence, identify opportunities, seize the opportunity to clear the direction of the development of new markets and new business after entering the market diversification strategy decision. In addition, the core of corporate executives have a significant impact on corporate diversification strategy, their personal growth experience, education background, personality and values, and other factors will affect their cognition, and thus affect the entire top management team cognition. At the same time, the government will also influence the top managers’ cognition, the response to the government’s policy can also cause the change of top manager’s cognition. There are some limitations because this research chooses two outstanding private enterprises, and has achieved some success in the diversified development, therefore, the research conclusion is not clear to the state-owned enterprise and the diversified enterprise whether the failure is not clear.