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Competitive strategy, development zone policy and firm growth: Empirical evidence from China

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  • Kaiyue Ye
  • Yugang Li
  • Peng Wu
  • Zhuhong Ye

Abstract

Competitive strategy plays an important role in achieving superior profits, but there is still much to be explored in terms of the effect on firm growth. This study focuses on exploring the relationship between competitive strategy and firm growth in emerging economies. We focus on how the development zone policies moderate this relationship. This study uses a two-way fixed-effect model to analyze data for 527 manufacturing firms listed in China’s Shanghai and Shenzhen A-shares from 2012-2021. Our empirical analysis showed that there is a significant positive relationship between low-cost strategy and firm growth and a significant negative relationship between differentiation strategy and firm growth. Compared with national development zones, firms in provincial development zones choose low-cost strategies that are more conducive to growth. Compared with provincial development zones, firms in national development zones choose differentiation strategies that are more conducive to growth. These findings contribute to understanding the mechanisms by which competitive strategy affects firm growth in different regional institutional contexts in emerging economies. The results of the study also have reference value for the government to optimize the development zone policies.

Suggested Citation

  • Kaiyue Ye & Yugang Li & Peng Wu & Zhuhong Ye, 2023. "Competitive strategy, development zone policy and firm growth: Empirical evidence from China," PLOS ONE, Public Library of Science, vol. 18(10), pages 1-17, October.
    • Handle: RePEc:plo:pone00:0292904
    DOI: 10.1371/journal.pone.0292904
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