The Relationship Between Board Social Capitaland Diversification Strategy

As an important pillar industry in China's national economy,the mining industry is facing the tremendous pressure of transformation and upgrading,due to multiple factors such as macroeconomic fluctuations,supply-side reform,ecological crisis and so on.Thus,a number of mining companies have implemented diversification strategies for sustainable development.The current study pays more attention to the external factors that affect the diversification strategy,only a few literature studying the internal governance structure but with immature conclusions.Therefore,from the perspective of internal governance in mining companies,this paper studies the relationship between board social capital and diversification strategy,as well as the regulatory effect of board power,with a view to providing reference for mining companies to develop their diversification strategies in a better way.Based on the theory of resource dependence,principal-agent theory,and upper-echelons theory,this article reviews the literature on board social capital,board power,and diversification strategy,and further analyzes the status of Chinese miningcompanies and the development of diversification strategies.Combining the characteristics of the mining industry and previous scholars' research,the research hypothesis and research model of this paper are put forward.Specifically,the empirical data is based on six consecutive years of financial data and board personal data of 49 listed Chinese mining companies from 2011 to 2016.The research results show that: First,there is a significant positive correlation between chained directors,political connection,financial background and diversification strategy;Second,when the board of directors has low power,the board power plays a positive mediation role in the relationship between chained directors,political connections,financial background and diversification strategy;and when the board of directors has higher power,the board power plays a negative mediation role in the relationship between financial background,chain directors and the diversification strategy,but plays a positive mediation role in the relationship between political connections and diversification strategy.The research conclusions have certain reference significance for the mining companies to construct the social capital of the board reasonably and improve the corporate governance mechanism to meet the development needs of the diversification strategy.