Abstract
This study focuses on the performance implication of diversification in China. It finds that product diversification has an inverse U-shaped relationship with firm performance, while geographic diversification has a U-shaped one. In addition, the interaction between product diversification and geographic diversification has a negative impact on firm performance. The findings not only enrich our knowledge of the value of diversification in China’s transition economy, but also guide Chinese firms on how to use diversification strategy to compete in the market and enhance their performance. Key words: Diversification, performance, China.
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