TITLE:
Literature Review on Diversification Strategy, Enterprise Core Competence and Enterprise Performance
AUTHORS:
Han Le
KEYWORDS:
Diversification, Corporate Performance, Corporate Core Competence
JOURNAL NAME:
American Journal of Industrial and Business Management,
Vol.9 No.1,
January
11,
2019
ABSTRACT: Diversification
is a strategic choice for enterprise expansion. Looking at the world, American
companies in the 1960s and 1970s opened up a diversified path through
large-scale mergers and acquisitions. However, by the 1980s and 1990s, American
companies began to change from diversification to specialization, gradually
returning to their main business, and the adjustment of this phenomenon made
the performance of those companies significantly improved. Since then, how
should companies abandon the choice of specialization and diversification strategy,
and whether diversification is beneficial or unfavorable
to corporate performance have become topics that domestic and foreign scholars are eager to study. Based
on the concept, motivation and type of diversification strategy, this paper
sorts out the relationship between corporate diversification strategy and
corporate performance in domestic and foreign literatures. It is found that
there is still no definitive answer to whether diversification strategy is beneficial
to corporate performance. There are four different relationships: positive correlation, negative correlation and no significant correlation, and
nonlinear correlation. The core competence of an enterprise is the fundamental
support of diversified business operations and a deep-seated factor in the
formulation and implementation of diversified business strategies. Research on
the core competence of enterprises as a regulation or mediator of the
relationship between diversification strategy and firm performance is still not
perfect, and research in this field needs to be further explored.