The Government Subsidies effect on the Company Strategic Change-Theory and Emprical

Abstract

Government environmental regulation is an important policy to promote industrial development. In view of the fact that the implementation of the enterprise's production strategy is not motivated enough, the government will directly subsidize the enterprise, healthy and stable development of the enterprise. Based on dynamic managerial capabilities theory and top management team theory, this paper takes Chinese A-share listed companies from 2012 to 2020 as research samples to theoretically analyze and empirically test the impact of government subsidies on strategic change. This paper also demonstrates the moderating effect of property right nature, tenure of top management team and career background of top management team on the above mentioned two relationships. The results in the research show as follows. Firstly, government subsidies are significantly positively correlated with the degree of strategic change. Secondly, in state-owned enterprises, government subsidies are positively correlated with strategic change, while in non-state-owned enterprises, they are not significantly correlated. Thirdly, tenure of the executive team weakens the positive correlation between government subsidies and the degree of strategic change. Fourthly, the "productive style" career background of the top management can enhance the positive correlation between government subsidies and strategic change. This paper not only enriches the research results of dynamic management ability and strategic decision-making, but also provides beneficial enlightenment for enterprises to implement strategic reform, which can response to the changing external environment and absorbing external social resources.