The Influence Of The Choice Of Innovation Methods On The Performance Of Enterprises Under The Diversification Strategy

With the development of my country's economy,the business structure of enterprises is constantly changing with changes in market demand.Potential entrants in the industry,rising prices of raw materials,and the transformation and upgrading of consumption are all urging companies to constantly seek new profit growth points and become more diversified.In the process of realizing the diversification strategy,companies will choose different innovative methods.The different innovation methods have their specific advantages and disadvantages and will have different impacts on corporate diversification strategies and corporate performance.Therefore,research on how innovation methods affect corporate diversification strategy and performance have very important practical significance.This article takes Midea Group and Gree Electric as specific cases,uses case study and comparative analysis to comb and analyze the diversification process and implementation methods of the two companies.It is found that the two companies have chosen two completely different innovation methods to promote diversification.Then,it analyzes the factors that affect the choice of innovation methods of the two companies from both the internal and external environment.Finally,the Herfindahl index is used to evaluate the degree of diversification of the two companies from 2013 to 2019,and the EVA momentum is used to evaluate the impact of different innovation methods on corporate performance.Through research,it is found that Midea Group chooses more to achieve diversification strategy through technological mergers and acquisitions,while Gree Electric chooses more to achieve diversification strategy through independent research and development.The government,the market,and the personal characteristics of managers all affect the choice of enterprise innovation methods.The diversification of the two companies is increasing year by year,but the diversification of Midea Group is higher than that of Gree Electric.Technology M&A and independent research and development are not two opposing innovation methods.Both innovation methods have their own advantages and disadvantages and their impact on corporate performance is uncertain.Only by combining its own characteristics,market prospects and other factors can companies choose their own diversification strategy realization method.When choosing technology mergers and acquisitions to achieve diversification,we must pay attention to later independent research and development;when choosing independent research and development to achieve diversification,we must pay attention to avoiding the lag of independent research and development,and can appropriately choose technology mergers and acquisitions to achieve rapid technological breakthroughs.