The Impact Of Diversification Strategy On Firm Performance

With the increasing highly market competition, many Chinese companies diversified into several industries in order to reduce risk and increase revenue; at the same time, with the greater degree of the Chinese economic open-up, more and more local firms begin to expand into international market. From the perspective of technological learning, following closely the reality of Chinese enterprises, this dissertation integratedly use a series of research methods such as literature review, large sample statistics and use statistical analysis software SPSS 16.0 to analyse the impact of product diversification and geographic diversification on firm performance based on the mediation of technological learning; in order to help Chinese companies to select the right diversification strategy to seek greater development, and enhancing the technological capability in new business or new expansion markets, and ultimately improve firm performance. Therefore, this research has profound practical and theoretical significance.The conclusion of this research as follow:(1) Related diversification can improve technological learning. In the diversification process, business-related enterprises ensure more significant learning effective and efficiency by access to new markets, new ideas, new culture and new competitors, partners and other resources to provide technological learning opportunities, and provide knowledge base for new core competency. On the other hand, geographic diversification can also promote technological learning, and promote the development of technology and capability to help enterprises to build a competitive advantage. Geographic diversification can reach the new ideas and thoughts from different markets and cultural perspectives, which benefit the system openness and promote technological learning.(2) Formal knowledge integration can help company to complete more broad, deeper and faster technological learning in the international operations. Knowledge integration is conducive to a combination of different technological skills, broaden their technological learning scenarios, force managers to explore how to overcome the organizational defect by the knowledge cultivated from different markets, share what they have learned with other employees, and to encourage managers to quickly recognize and internalize technological knowledge obtained from the diversification strategy. (3) Technological learning can improve the firm performance. Enterprises get important business knowledge through technological learning, which can be used to design and provide more diversified and innovative products; provide differentiated high-quality products, and quickly promote products to market, therefore, these companies can achieve higher financial performance.(4) Product diversification and regional diversification directly related to firm performance besides the indirectly influence based on the mediation of technological learning, which provides a strong empirical evidence for the relationship between diversification strategy and firm performance.