Environmental Dynamics, Financial Flexibility and Enterprise Strategic Change

Abstract

Enterprise strategic change is affected by the external environment, so the research on the relationship between external environment and strategic change has always been concerned by academic circles. Based on contingency theory and resource-based theory, this paper analyzes the influence of environmental dynamics on the strategic change of manufacturing enterprises, and explores how corporate financial flexibility adjusts the relationship between environmental dynamics and strategic change. Taking the 2011-2017 A-share listed manufacturing companies in Shanghai and Shenzhen stock markets as the research object, the empirical results show that: 1) the environmental dynamism is positively related to strategic change-the more dynamic the environment is, the more the manufacturing enterprise inclined to implement the strategic change; 2) financial flexibility positively regulates the impact of environmental dynamics on strategic change. The high level of financial flexibility means abundant resources for strategic change, and the greater the role of environmental dynamism in promoting the implementation of strategic change by manufacturing enterprises. This paper deepens the research on the impact of environmental dynamism on enterprise strategic change, and introduces financial flexibility as a moderating variable, which enriches the theoretical system of strategic change. At the same time, this paper takes manufacturing enterprises as the research object to provide theoretical and practical guidance for Chinese manufacturing enterprises to optimize financial flexible reserve according to the dynamic degree of the environment to successfully implement strategic change.

Effect of Strategic Change and Adaptation on Organizational Performance A Comprehensive Literature Review

“…The other nding shows that environmental dynamism is positively related to resource-related strategic change and to change in general. Second, nancial exibility signi cantly improves the relationship between environmental dynamics and strategic change by acting as a signi cant positive regulator (Yang, 2019). resources and help for entrepreneurs (external or internal) The development of product quality was a priority for entrepreneurs, and this had a positive impact on strategic adaptation (Kujala, 2022) .…”

Understanding the Sustainable Competitive Advantages of China’s Private Manufacturing Enterprises: An Empirical Study Based on the Dynamic Capabilities of Supply Chain

“…Therefore, environment is a variable that small and medium-sized private manufacturing enterprises must consider, and it is an important regulatory variable of supply chain management [35]. Environmental dynamism describes the change degree and predictability of external environment faced by enterprises [36]. The highly turbulent environment makes companies face rapid changes in industry technology, constant changes in customer preferences, continuous and large fluctuations in product demand and material supply, and endless emergence of competitors [37].…”

Exploring Environment-Strategy-Performance (E-S-P) Paradigm in General Insurance Companies in Indonesia

“…Another study by Yang, P. (2019) which examined the relationship between environmental dynamics and strategy stated that there was a relationship between the variables of environmental dynamics on the strategy, where the more dynamic the corporate environment, the more companies tended to implement strategic change. In addition, Köseoglu et al, (2013) examined the relationship between environmental uncertainty and prospector strategies in the hospitality industry and concluded that related to environmental uncertainty, the prospector of the best option strategy was seen from financial and non-financial performance measures.…”