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The impact of customer risk on Enterprises' strategic change: Evidence from China

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  • Dong, Xiaohong
  • Cheng, Yan
  • Cheng, Chiao-Ming
  • Liu, Hung-Chun

Abstract

In an era marked by continuous advancements in the supply chain, the symbiotic nature of the relationship between customers and suppliers has become increasingly pronounced. Motivated by the research on the contagion effects of supply chain, we use Chinese A-share listed companies from 2010 to 2021 to investigate the impact of customer risk on enterprises' strategic adaptation and further elucidate the underlying mechanisms. Our results show that customer risk promotes enterprise’ strategic change by increasing the level of business risk and financing constraints. Further analyses show that customer risk can have different effects on different dimensions of firm strategic change. Meanwhile, certain environmental variables, including overconfident managers, a higher proportion of female executives, non-state-owned firms, smaller firm size, lower profitability, and a highly competitive market position, highlight the role of customer risk in driving enterprises' strategic change. Economic consequence test suggests that enterprises' implementation of strategic change enhances firm value. These conclusions offer a novel perspective on enterprise strategy dynamics and provide a theoretical framework for optimizing resource allocation, promoting healthy, and sustainable enterprise growth.

Suggested Citation

  • Dong, Xiaohong & Cheng, Yan & Cheng, Chiao-Ming & Liu, Hung-Chun, 2025. "The impact of customer risk on Enterprises' strategic change: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 100(C).
    • Handle: RePEc:eee:finana:v:100:y:2025:i:c:s1057521925000687
    DOI: 10.1016/j.irfa.2025.103981
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