Environment uncertainty and a firm’s strategic change the moderating role of political connection and family ownership

Abstract

Purpose Strategic change is integral to the survival and development of firms. The purpose of this paper is to analyze the impact of environmental uncertainty on a firm’s strategic change and further demonstrates the moderating role of political connection and family ownership on the relationship between environmental uncertainty and a firm’s strategic change. Design/methodology/approach This paper uses the population sample of Chinese firms listed on the Shenzhen Stock Exchange and the Shanghai Stock Exchange from 2008 to 2014 and quantitatively tests hypotheses through correlation analysis, regression analysis and other methods. Findings Environmental uncertainty has a positive effect on the degree of strategic changes made. Political connection and family ownership negatively moderate the impact of the two dimensions of environmental uncertainty (environmental dynamism and environmental munificence) on strategic changes. Originality/value Conclusions enrich the research of other studies on firms’ strategic changes. From an open systems perspective, this paper reveals the influences of external environmental factors on firms’ strategic changes. In addition to this, in analyzing the ways in which environmental uncertainty affects a firm’s strategic change, the research expands the application scope of information processing theory and resource-based view. This paper also provides significant practical observations on firms’ strategic decision making in this area.