Corporate diversification and efficiency: evidence from Taiwanese top 100 manufacturing firms

Wei-Kang Wang (), Irene Wei Kiong Ting (), Kuo-Cheng Kuo (), Qian Long Kweh () and Yan-Heng Lin ()
Additional contact information
Wei-Kang Wang: Yuan Ze University
Irene Wei Kiong Ting: Universiti Tenaga Nasional
Kuo-Cheng Kuo: Chinese Culture University
Qian Long Kweh: Universiti Tenaga Nasional
Yan-Heng Lin: Yuan Ze University

Operational Research, 2018, vol. 18, issue 1, No 9, 187-203

Abstract: Abstract For at least the last two decades, diversification has been an important issue in the strategic management research. This paper explores how diversification affects the corporate performance of the top 100 manufacturing companies in Taiwan, which were selected based on a ranking survey of Taiwanese manufacturing firms conducted by Common Wealth Magazine in 2014. This paper adopts a dynamic data envelopment analysis model to estimate efficiency in the first stage, and adopts OLS regression analysis in the second stage from 2009 to 2013. Two proxies, namely the Entropy approach and the Herfindahl–Hirschman Index, are used to proxy for diversification. The results indicate that diversification has positive impacts on dynamic efficiency, after controlling firm-specific factors. Concisely, this study empirically proves that diversification is an important corporate strategy for improving corporate performance over long-term periods. Overall, “putting eggs in various baskets” enable companies to not only survive, but also sustain competitive advantage in today’s challenging business world.

Keywords: Dynamic data envelopment analysis; Diversification; Corporate performance; Efficiency; 68M20; 62G05; 90C39 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://link.springer.com/10.1007/s12351-016-0259-4 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:operea:v:18:y:2018:i:1:d:10.1007_s12351-016-0259-4

Ordering information: This journal article can be ordered from
https://www.springer ... search/journal/12351

DOI: 10.1007/s12351-016-0259-4

Access Statistics for this article

Operational Research is currently edited by Nikolaos F. Matsatsinis, John Psarras and Constantin Zopounidis

More articles in Operational Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().