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How and when economic policy uncertainty influences firms' strategic change: the role of CEO turnover and organizational inertia

Xi Zhong (School of Management, Guangdong University of Technology, Guangzhou, China)
Weihong Chen (School of Economics, Guangxi University, Nanning, China)
Ge Ren (School of Business Administration, South China University of Technology, Guangzhou, China)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 10 November 2021

Issue publication date: 21 November 2023

806

Abstract

Purpose

Many studies have examined the antecedents of firms' strategic change on a micro and meso level, but few studies have explored it from the macrolevel (e.g. economic policy uncertainty) perspective. This research draws attention to the impact of economic policy uncertainty on firms' strategic change.

Design/methodology/approach

This research empirically tests hypotheses based on a sample of listed firms in China during the period between 2010 and 2017.

Findings

Based on real options theory, the authors theorize and find that economic policy uncertainty will negatively affect firms' strategic change through the mediating effect of CEO turnover. Moreover, organizational inertia will strengthen the negative impact of economic policy uncertainty on CEO turnover and will weaken the positive impact of CEO turnover on firms' strategic change.

Originality/value

First, this research contributes to the strategic change literature by demonstrating the important impact of economic policy uncertainty on firms' strategic change. Second, this research expands the literature on the economic consequences of economic policy uncertainty. Third, this research clarifies the path and boundary conditions of economic policy uncertainty affecting strategic change by introducing the mediating effects of CEO turnover and the moderating effects of organizational inertia.

Keywords

Acknowledgements

The authors appreciate editors and four anonymous reviewers for their insightful comments and suggestions. The authors also are grateful to the financial support from the National Social Science Foundation Project of China (Grant No. 20BGL103).

Citation

Zhong, X., Chen, W. and Ren, G. (2023), "How and when economic policy uncertainty influences firms' strategic change: the role of CEO turnover and organizational inertia", International Journal of Emerging Markets, Vol. 18 No. 10, pp. 3640-3656. https://doi.org/10.1108/IJOEM-02-2021-0273

Publisher

:

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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