Effects of diversified strategic resource configuration on corporate performance: Evidence from listed companies in pharmaceutical and biotech industry in China

Without a clear consensus of the relationship between diversification strategy and corporate performance, this paper, with annual financial report data of listed companies in pharmaceutical and biotech industry in China from the year 2003 to the year 2009 as sample, investigated the impact and the timing lag of diversified resources configuration, namely, focus level, related diversification level and vertical integration level, on corporate performance, using the polynomial distributed lag (PDL) data model. The empirical results indicate that different way of resource configuration has different influence on corporate performance. And the link between the resource configuration and ROA may reverse over time. Focus level is positively correlated with ROA in the early stage of resource configuration, but negatively with time extension; related diversification level is negatively related with ROA in the short run, but positively with time goes on. Vertical integration level is positive with ROA in the long run. There shows no significant reverse of link between resource configuration and RGR over time.