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Government–business relationship and strategic transformation of enterprises: Evidence from China

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  • Juntao, Liu
  • Haitao, Liu

Abstract

This research uses data from private firms listed on China's A-share market (2016–2020), investigating the positive impact of strong regional government-business relations on firms' strategic transformations. Results indicate a positive correlation between healthier government-business relationships. Path testing reveals that the relationship primarily enhance the level of strategic transformation in private enterprises by reducing financing constraints within enterprises. This effect is stronger in areas with higher marketization levels and where management has significant shareholding. The study enriches understanding of the economic benefits of healthy government-business relations and offers empirical insights for enhancing strategic transformations in private enterprises.

Suggested Citation

  • Juntao, Liu & Haitao, Liu, 2023. "Government–business relationship and strategic transformation of enterprises: Evidence from China," Finance Research Letters, Elsevier, vol. 58(PD).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pd:s1544612323009868
    DOI: 10.1016/j.frl.2023.104614
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