Do International Trade Frictions Influence the Competitiveness of Entity Enterprises? Evidence from the Perspective of Financialization

Abstract

International trade frictions have changed the business environment of enterprises. However, how do these changes influence the behavioral decisions of enterprises, and will this further affect enterprise competitiveness? Exploring these questions will help determine the influencing mechanism of external negative impacts, such as international trade frictions, on the competitiveness of entity enterprises. In this study, the influences of China-U.S. trade friction, which served as an exogenous research event, on the competitiveness of entity enterprises were empirically analyzed via a difference-in-difference (DID) model with semiannual report information of Chinese nonfinancial A-share listed companies in 2016 to 2020 as research samples. Research results show that the China-U.S. trade friction promotes enterprises to enlarge their financial asset investment by changing the business environment of enterprises. Moreover, this friction further weakens the enterprise competitiveness, an essential element of industrial investments. As revealed by further heterogeneity analysis, the China-U.S. trade friction has generated heterogenous influences on enterprise competitiveness in the aspects of investment motives, industry, competition status, and internal governance mechanism. In this study, two types of enterprise competitiveness elements—environment and resources—were included into the same research framework, and the category of theoretical research on the connotation of enterprise competitiveness was expanded. Moreover, this research provided new scenes and evidence for identifying the causal relationships of the impacts of exogenous negative events with the financial behaviors and competitiveness of entity enterprises, Furthermore, it rendered countermeasure paths and policy suggestions for scientifically coping with international trade frictions and enhancing the competitiveness of entity enterprises. Subject Classification Codes: F51; G31; G32; L25