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The effect of political turnover on firms’ strategic change in the emerging economies: The moderating role of political connections and financial resources

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  • Choi, Seong-jin
  • Liu, Huilong
  • Yin, Jun
  • Qi, Yunfei
  • Lee, Jeoung Yul

Abstract

Do external uncertainties hold back or accelerate firms’ strategic change? To examine this issue, we develop a theoretical framework on the relationship between policy uncertainty caused by political turnover and the level of a firm’s strategic change and also theorize how political connections and financial resources affect firms’ response in the form of strategic change to environmental uncertainty. We test our framework with 16,451 firm-year observations of listed firms in China from 2008 to 2015 and find that political turnover has a negative influence on the level of a firm’s strategic change. Moreover, this influence is mitigated by political connections and/or financial resources.

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  • Choi, Seong-jin & Liu, Huilong & Yin, Jun & Qi, Yunfei & Lee, Jeoung Yul, 2021. "The effect of political turnover on firms’ strategic change in the emerging economies: The moderating role of political connections and financial resources," Journal of Business Research, Elsevier, vol. 137(C), pages 255-266.
    • Handle: RePEc:eee:jbrese:v:137:y:2021:i:c:p:255-266
    DOI: 10.1016/j.jbusres.2021.08.034
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