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Abstract Based on the Chinese business groups listed in the Shanghai Stock Exchange from 2006 to 2010, this study investigates the relationship between industry development strategy and business groups’ performance during the institutional transition. Through constructing three variables including unrelated diversification, related diversification and specialization, the empirical evidences indicate that Chinese business groups should refocus their industry scopes in response to dual institutional evolutions. In contrast, unrelated diversification exerts destructive influences on groups’ performance. These results enrich the application of institutional theory in Chinese context and emphasize on the challenges faced by Chinese managers, such as the industrial know-how enhancement and core resource building.
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Received: 28 November 2017
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