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Economic policy uncertainty and business performance: The moderating role of service transformation

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  • Ou, Ling
  • Zhang, Zhibin
  • Li, Renyu
  • Chen, Zhuo

Abstract

Using a sample of Chinese A-share-listed manufacturing companies from 2011 to 2020, the impact of economic policy uncertainty (EPU) on business performance was analyzed. The results show that EPU is detrimental to improving business performance; service transformation can significantly offset the adverse effects of EPU on business performance. This positive effect increases with the depth of service transformation. Furthermore, embedded service transformation is more effective than mixed-service transformation in weakening the adverse effects of EPU on business performance. Additionally, the study found that the moderate effect is more noticeable in non-state-owned enterprises and low-sale growth firms. The results are robust after the specifications of many variables, possible endogeneity issues, and more control variables are considered.

Suggested Citation

  • Ou, Ling & Zhang, Zhibin & Li, Renyu & Chen, Zhuo, 2023. "Economic policy uncertainty and business performance: The moderating role of service transformation," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 531-546.
    • Handle: RePEc:eee:reveco:v:88:y:2023:i:c:p:531-546
    DOI: 10.1016/j.iref.2023.06.038
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    References listed on IDEAS

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    1. Bordo, Michael D. & Duca, John V. & Koch, Christoffer, 2016. "Economic policy uncertainty and the credit channel: Aggregate and bank level U.S. evidence over several decades," Journal of Financial Stability, Elsevier, vol. 26(C), pages 90-106.
    2. Vineet Bhagwat & Robert Dam & Jarrad Harford, 2016. "The Real Effects of Uncertainty on Merger Activity," The Review of Financial Studies, Society for Financial Studies, vol. 29(11), pages 3000-3034.
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    Cited by:

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    3. Zhang, Xiekui & Huang, Yihan & Fenglan Wei,, 2024. "The incentive effects of the macro tax burden on economic growth: A negative or positive incentive effect? Analysis based on panel data," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 128-147.
    4. Juntao, Liu & Haitao, Liu, 2023. "Government–business relationship and strategic transformation of enterprises: Evidence from China," Finance Research Letters, Elsevier, vol. 58(PD).
    5. Du, Kunhai & Zhao, Qicheng & Yin, Yugang & Zhang, Tiancheng, 2024. "Marketing executives and corporate performance: From the perspective of marketing digitalization," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 631-644.
    6. Huma Jamshaid & Muhammad Nauman Abbasi & Raza Ali, 2024. "Sustainability Amplified: Servitization, Integration and Buyer-Supplier Nexus," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 13(1), pages 297-306.
    7. Choi, Young Mok & Park, Kunsu, 2024. "Economic policy uncertainty and dividend policy: Insight from private firms," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    8. Sun, Haibo & Bai, Tonghuan & Liu, Zhonglu, 2024. "Perceived policy uncertainty and enterprise greenwashing risk," Finance Research Letters, Elsevier, vol. 69(PA).

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