The Impact Of Technological Diversification On Firm Performance

With the accelerated process of economic globalization,technological innovation has become the determining factor in the development of the company,region and national economy in recent years.In today's highly competitive business environment,an ability to continuously generate innovations is recognized as the critical sources of competitive advantages of the firms,so it has become an inexorable trend to expand innovation activities and grasp a variety of technologies.Technological diversification has received substantial attention from studies in strategic management and technological innovation,as many firms have increasingly diversified their technological resources.Two strands of research have been most popular: One examines the patterns and determinants of technological diversification,and the other investigates the effect of technological diversification on corporate performance,as measured by,for example,technological innovation,firm profitability,or firm market value.However,the existing research pay more attention on enterprises from developed countries,has a lack of empirical study from developing countries.In addition,there is no agreed conclusion about the impact of technological diversification on firm performance,lead to the absence of theoretical and practical reference in the process of technological diversification of enterprises which from developing countries.On the bases of reviewing the technological diversification literatures,This paper investigates three important issues on how technological diversification has impact on firm financial performance.Firstly,what immediate impact technological diversification have on firm financial performance;secondly,what impact related and unrelated technological diversification have on firm financial performance respectively;thirdly,what's effect core-technology competence in enterprise on regulating related and unrelated technological diversification with firm financial performance.The sample of this study from 102 listed companies in automobile industry,after careful collation we obtained 73 listed companies in our study sample,a total of 429 group data during 7 years.According to the assumption put forward,this paper constructed the corresponding empirical model,used EViews to finish the initial and regression analysis.The results indicate that technological diversification and unrelated technological diversification have an inverted U-shaped relationship with firm financial performance,related technological diversification has a positive influence on firm financial performance.Core-technology competence has a significant positive moderating effects on this relationship between related or unrelated technological diversification and firm financial performance.Above all,this paper puts forward some measures and suggestions,which can be used by Chinese automobile industry companies to manage their technological diversification.