Relationships among industry environment, diversification motivations and corporate performance

Purpose - This paper aims to examine empirically the relationships among industry environment, diversification motivations and corporate performance for a sample of Taiwanese automobile enterprises.Design methodology approach - A 55-item survey questionnaire was developed to obtain the responses from companies in the automobile industry in Taiwan. Independent sample t-test and χ2 tests were employed to confirm the homogeneity between the respondents and non-respondents by firm's characteristics, including by industry, number of employees, and capital.Findings - The results suggest that industry environment has positive and significant impact on diversification motivations, and has positive but not significant impact on corporate performance. Diversification motivations has positive and significant impact on corporate performance. The results also indicate that firms of higher capital amounts have greater influence on diversification motivations and corporate performance, firms of publicly listed have greater influence on industry environment, diversification motivations and corporate performance and firms of higher degree of diversification have greater influence on diversification motivations only.Research limitations implications - Several limitations exist in this study. This study adopts the cross-sectional research design and examines firms at one point time and because of the constraints of time and data availability, longitudinal research was not viable in this study. Also the amount of variation for some regression models is low.Originality value - The paper's results not only provide researchers with a theoretical basis for further research, but also provide top management teams with important data when engaging in diversification.