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  • Research Article
  • Open Access

Determinants of diversification by listed firms in China

Frontiers of Business Research in ChinaSelected Publications from Chinese Universities20082:10

Published: 30 July 2008


This paper empirically studies the determinants of diversification of Chinese listed companies from the perspectives of motivation and conditions. Results show that the traditionally believed motivations of economic rationality, organizational rationality and individual rationality have all exerted influences upon the choice of diversification models. By comparison, the choice of diversification mode for Chinese listed firms is largely based on organizational rationality motivation (to reduce company risks) and individual rationality motivation (in the self-serving interests of the top management). Meanwhile, such conditioning factors as company size, ownership structure, age of being listed, and the industry in which a company is all have significant effects on the choice and degree of diversification for Chinese listed firms.


  • diversification
  • determinants
  • economic rationality
  • organizational rationality
  • individual rationality