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Business Group's Diversification Strategy and Sustainability

Author

Listed:
  • Fang-Yi Lo

    (Department of International Trade, Feng Chia University, Taiwan)

  • Ming-Kai Hsu

    (Department of International Trade, Feng Chia University, Taiwan)

Abstract

This paper explores how the resource endowments of business groups affect diversification strategy, and how different degrees of diversification influence business group financial performance and sustainability. The sample of this study is the top 300 business groups in Taiwan according to China Credit Information Service. Regression results show that tangible, intangible, and human resource endowments all positively affect business group diversification strategy. We also find an inverted-U relationship between the degree of diversification and the financial performance. Thus, diversification strategy enhances business group sustainability.

Suggested Citation

  • Fang-Yi Lo & Ming-Kai Hsu, 2016. "Business Group's Diversification Strategy and Sustainability," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 15(1), pages 35-49, June.
    • Handle: RePEc:ijb:journl:v:15:y:2016:i:1:p:35-49
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    References listed on IDEAS

    as
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    8. David J. Teece, 2003. "Towards an Economic Theory of the Multiproduct Firm," World Scientific Book Chapters, in: Essays In Technology Management And Policy Selected Papers of David J Teece, chapter 15, pages 419-446, World Scientific Publishing Co. Pte. Ltd..
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Lo, Fang-Yi & Liao, Pei-Chun, 2021. "Rethinking financial performance and corporate sustainability: Perspectives on resources and strategies," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    2. Fang-Yi Lo & Kun-Huang Huarng & Andrea Rey-Martí, 2019. "Entrepreneur subsidiary of business groups from emerging markets: a multi-level perspective," International Entrepreneurship and Management Journal, Springer, vol. 15(2), pages 471-483, June.

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    More about this item

    Keywords

    business groups; diversification strategy; financial performance; sustainability;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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