IDEAS home Printed from https://ideas.repec.org/a/spr/eurasi/v14y2024i4d10.1007_s40821-024-00281-8.html
   My bibliography  Save this article

Business environment optimization and corporate strategy “Entropy Change”-based on the perspective of corporate strategic focus

Author

Listed:
  • Deshuai Hou

    (Capital University of Economics and Business)

  • Junnan Yan

    (Capital University of Economics and Business)

  • Manru Dong

    (Beijing Wuzi University)

Abstract

Limiting the rise in “strategic entropy” and enhancing strategic focus are critical for corporations to achieve sustainable, high-quality development. This paper demonstrates that improving the business environment can induce a negative entropy flow within firms, fostering orderly growth and enhancing strategic focus. These transformations are primarily attributed to the mechanisms of buffering financial pressures, optimizing costs, and fostering innovation through an improved business environment. Further analysis indicates that optimizing the business environment positively affects corporate capabilities and reduces risks. Notably, enhancing strategic focus appears markedly pronounced among non-state-owned companies, non-high-technology industries, and companies at non-mature stages. Moreover, a detailed examination of the business environment shows that refining the investment and financing environment, enterprise market environment, government intervention environment, and population consumption environment substantially bolsters companies' strategic focus. This research offers theoretical and empirical support for enhancing corporate strategic focus and promoting orderly development.

Suggested Citation

  • Deshuai Hou & Junnan Yan & Manru Dong, 2024. "Business environment optimization and corporate strategy “Entropy Change”-based on the perspective of corporate strategic focus," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 14(4), pages 1093-1121, December.
    • Handle: RePEc:spr:eurasi:v:14:y:2024:i:4:d:10.1007_s40821-024-00281-8
    DOI: 10.1007/s40821-024-00281-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40821-024-00281-8
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s40821-024-00281-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. repec:bla:jfinan:v:43:y:1988:i:3:p:567-91 is not listed on IDEAS
    2. Di Gao & Jiangming Ma & Yiru Wang, 2021. "Does the risk of major customer need to be balanced? The role of customer concentration in corporate governance," PLOS ONE, Public Library of Science, vol. 16(11), pages 1-20, November.
    3. Jana Oehmichen & Sebastian Schrapp & Michael Wolff, 2017. "Who needs experts most? Board industry expertise and strategic change—a contingency perspective," Strategic Management Journal, Wiley Blackwell, vol. 38(3), pages 645-656, March.
    4. Brian R. Golden & Edward J. Zajac, 2001. "When will boards influence strategy? inclination × power = strategic change," Strategic Management Journal, Wiley Blackwell, vol. 22(12), pages 1087-1111, December.
    5. Birger Wernerfelt, 1984. "A resource‐based view of the firm," Strategic Management Journal, Wiley Blackwell, vol. 5(2), pages 171-180, April.
    6. Ilke Van Beveren, 2012. "Total Factor Productivity Estimation: A Practical Review," Journal of Economic Surveys, Wiley Blackwell, vol. 26(1), pages 98-128, February.
    7. Yan Zhang & Nandini Rajagopalan, 2010. "Once an outsider, always an outsider? CEO origin, strategic change, and firm performance," Strategic Management Journal, Wiley Blackwell, vol. 31(3), pages 334-346, March.
    8. Sughra Bibi & Asif Khan & Hongdao Qian & Achille Claudio Garavelli & Angelo Natalicchio & Paolo Capolupo, 2020. "Innovative Climate, a Determinant of Competitiveness and Business Performance in Chinese Law Firms: The Role of Firm Size and Age," Sustainability, MDPI, vol. 12(12), pages 1-24, June.
    9. Son Le & Mark Kroll, 2017. "CEO international experience: Effects on strategic change and firm performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(5), pages 573-595, July.
    10. Maryna Brychko & Yuriy Bilan & Serhiy Lyeonov & Dalia Streimikiene, 2023. "Do changes in the business environment and sustainable development really matter for enhancing enterprise development?," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(2), pages 587-599, April.
    11. Chou, Yen-Chun & Hao-Chun Chuang, Howard & Shao, Benjamin B.M., 2014. "The impacts of information technology on total factor productivity: A look at externalities and innovations," International Journal of Production Economics, Elsevier, vol. 158(C), pages 290-299.
    12. Chen, Zehao & Li, Yibo & Lin, Yuyang & Pan, Jingrui, 2023. "Business environment and corporate financing decisions: From the perspective of dynamic adjustment of capital structure," Finance Research Letters, Elsevier, vol. 58(PB).
    13. Edward J. Zajac & Matthew S. Kraatz & Rudi K. F. Bresser, 2000. "Modeling the dynamics of strategic fit: a normative approach to strategic change," Strategic Management Journal, Wiley Blackwell, vol. 21(4), pages 429-453, April.
    14. Li, Sihai & Wu, Huiying & Jiang, Xinfeng, 2018. "Rent-seeking and firm value: Chinese evidence," Business and Politics, Cambridge University Press, vol. 20(2), pages 239-272, June.
    15. Xuzhao Zhang & Hong Cai & Haomiao Tu, 2023. "Impact of Landscape Pattern on River Water Quality Based on Different Topographic Relief Areas: A Case Study of Chishui River Basin in Southwest China," Sustainability, MDPI, vol. 15(2), pages 1-21, January.
    16. Kim, Taeyeon & Kim, Hyun-Dong & Park, Kwangwoo, 2023. "Customer concentration and firm risk: The role of outside directors from a major customer," Journal of Banking & Finance, Elsevier, vol. 152(C).
    17. Zhiyuan Dong & Zenglian Zhang, 2022. "Does the Business Environment Improve the Sustainable Development of Enterprises?," Sustainability, MDPI, vol. 14(20), pages 1-20, October.
    18. Vivian W. Fang & Xuan Tian & Sheri Tice, 2014. "Does Stock Liquidity Enhance or Impede Firm Innovation?," Journal of Finance, American Finance Association, vol. 69(5), pages 2085-2125, October.
    19. Demirguc-Kunt, Asli & Love, Inessa & Maksimovic, Vojislav, 2006. "Business environment and the incorporation decision," Journal of Banking & Finance, Elsevier, vol. 30(11), pages 2967-2993, November.
    20. Benhong Peng & Yinyin Zhao & Ehsan Elahi & Anxia Wan, 2022. "Does the business environment improve the competitiveness of start‐ups? The moderating effect of cross‐border ability and the mediating effect of entrepreneurship," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1173-1185, September.
    21. Pol Herrmann & Sucheta Nadkarni, 2014. "Managing strategic change: The duality of CEO personality," Strategic Management Journal, Wiley Blackwell, vol. 35(9), pages 1318-1342, September.
    22. Pavlenchyk, Nataliia & Horbonos, Fedir & Pavlenchyk, Anatoliі & Skrynkovskyy, Ruslan & Pawlowski, Grzegorz, 2021. "Increasing the competitiveness of enterprises based on the use of marketing management tools," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 7(3), September.
    23. Shuying Wang & Yifei Gao & Hongchang Zhou, 2022. "Research on Green Total Factor Productivity Enhancement Path from the Configurational Perspective—Based on the TOE Theoretical Framework," Sustainability, MDPI, vol. 14(21), pages 1-20, October.
    24. Margaret A. Abernethy & Henri C. Dekker & Jennifer Grafton, 2021. "The Influence of Performance Measurement on the Processual Dynamics of Strategic Change," Management Science, INFORMS, vol. 67(1), pages 640-659, January.
    25. Steven N. Kaplan & Luigi Zingales, 1997. "Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(1), pages 169-215.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yu Wang & Xiaoying Chang & Tienan Wang, 2023. "Government directors as a double‐edged sword for strategic change: Strong resource provision but weak monitoring," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(3), pages 1802-1819, April.
    2. Stefan Schmid & Sebastian Baldermann, 2021. "CEOs’ International Work Experience and Compensation," Management International Review, Springer, vol. 61(3), pages 313-364, June.
    3. Sven Kunisch & Julian Birkinshaw & Michael Boppel & Kira Choi, 2023. "Why do firms launch corporate change programs?," Post-Print hal-04325790, HAL.
    4. 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.
    5. Kejing Chen & Qiaoshuang Meng & Yutao Sun & Qingqing Wan, 2024. "How does industrial policy experimentation influence innovation performance? A case of Made in China 2025," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-17, December.
    6. Triana, María del Carmen & Richard, Orlando C. & Su, Weichieh, 2019. "Gender diversity in senior management, strategic change, and firm performance: Examining the mediating nature of strategic change in high tech firms," Research Policy, Elsevier, vol. 48(7), pages 1681-1693.
    7. Biru, Ashenafi & Filatotchev, Igor & Bruton, Garry & Gilbert, David, 2023. "CEOs’ regulatory focus and firm internationalization: The moderating effects of CEO overconfidence, narcissism and career horizon," International Business Review, Elsevier, vol. 32(3).
    8. Homroy, Swarnodeep, 2023. "GHG emissions and firm performance: The role of CEO gender socialization," Journal of Banking & Finance, Elsevier, vol. 148(C).
    9. He, Jie (Jack) & Tian, Xuan, 2013. "The dark side of analyst coverage: The case of innovation," Journal of Financial Economics, Elsevier, vol. 109(3), pages 856-878.
    10. Lee, Eugenia Y. & Ha, Wonsuk & Park, Sunyoung, 2023. "Auditor specialization in R&D and clients’ R&D investment-q sensitivity," Journal of Contemporary Accounting and Economics, Elsevier, vol. 19(2).
    11. Guo, Bing & Pérez-Castrillo, David & Toldrà-Simats, Anna, 2019. "Firms’ innovation strategy under the shadow of analyst coverage," Journal of Financial Economics, Elsevier, vol. 131(2), pages 456-483.
    12. Laura Neumeyer & Anna Gründler & Anna-Luisa Stöber, 2023. "Don’t Worry, Be Happy—Does the CEO’s Personality Mitigate the Negative Effect of Financial Constraints on Employee Satisfaction?," Schmalenbach Journal of Business Research, Springer, vol. 75(1), pages 71-98, March.
    13. Sheng-Syan Chen & Chia-Wei Huang & Chuan-Yang Hwang & Yanzhi Wang, 2022. "Voluntary disclosure and corporate innovation," Review of Quantitative Finance and Accounting, Springer, vol. 58(3), pages 1081-1115, April.
    14. Giau Bui, Dien & Chen, Yehning & Lin, Chih-Yung & Lin, Tse-Chun, 2021. "Risk-taking of bank CEOs and corporate innovation," Journal of International Money and Finance, Elsevier, vol. 115(C).
    15. Fabisik, Kornelia & Fahlenbrach, Rüdiger & Stulz, René M. & Taillard, Jérôme P., 2021. "Why are firms with more managerial ownership worth less?," Journal of Financial Economics, Elsevier, vol. 140(3), pages 699-725.
    16. Shang, Longfei & Lin, Ji-Chai & Saffar, Walid, 2021. "Does economic policy uncertainty drive the initiation of corporate lobbying?," Journal of Corporate Finance, Elsevier, vol. 70(C).
    17. Muhammad Arif Khan & Meng Bin & Chunlin Wang & Hazrat Bilal & Arshad Ali Khan & Irfan Ullah & Amjad Iqbal & Mohib Ur Rahman, 2023. "Impact of R&D on Firm Performance: Do Ownership Structure and Product Market Competition Matter?," SAGE Open, , vol. 13(4), pages 21582440231, November.
    18. Chengcheng Li & Xiaoqiong Wang & Feifei Zhu, 2024. "Does share pledging impair stakeholder welfare? Evidence based on corporate social responsibility," Review of Quantitative Finance and Accounting, Springer, vol. 63(4), pages 1155-1192, November.
    19. Liu, Bai & Ju, Tao & Chan, Hing Kai, 2022. "The diverse impact of heterogeneous customer characteristics on supply chain finance: Empirical evidence from Chinese factoring," International Journal of Production Economics, Elsevier, vol. 243(C).
    20. Xue, Qinyuan & Jin, Yifei & Zhang, Cheng, 2024. "ESG rating results and corporate total factor productivity," International Review of Financial Analysis, Elsevier, vol. 95(PA).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:eurasi:v:14:y:2024:i:4:d:10.1007_s40821-024-00281-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.