Decentralized and concentrated investments in China and the performance of Taiwanese listed electronic companies

Abstract

Ever since China surpassed Taiwan to become the largest exporter of electronic products, dependence between the two sides has deepened, which prompts Taiwanese companies to go public in China. This study conducted the data envelopment analysis (DEA) and regression analysis to analyse the impacts of the depth and breadth of investments in China on the performance of Taiwanese listed electronic companies. The empirical results show that, the breath of the investments in China has a positive correlation with the performance of Taiwanese companies; while the depth of investments in China has a negative and significant effect on the performances due to the companies’ lack of know-how, which leads to a high-learning cost. In summary, companies should strategize their decentralized and concentrated investments in China. © 2016 Informa UK Limited, trading as Taylor & Francis Group.