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Business environment optimization and corporate strategy “Entropy Change”-based on the perspective of corporate strategic focus

Author

Listed:
  • Deshuai Hou

    (Capital University of Economics and Business)

  • Junnan Yan

    (Capital University of Economics and Business)

  • Manru Dong

    (Beijing Wuzi University)

Abstract

Limiting the rise in “strategic entropy” and enhancing strategic focus are critical for corporations to achieve sustainable, high-quality development. This paper demonstrates that improving the business environment can induce a negative entropy flow within firms, fostering orderly growth and enhancing strategic focus. These transformations are primarily attributed to the mechanisms of buffering financial pressures, optimizing costs, and fostering innovation through an improved business environment. Further analysis indicates that optimizing the business environment positively affects corporate capabilities and reduces risks. Notably, enhancing strategic focus appears markedly pronounced among non-state-owned companies, non-high-technology industries, and companies at non-mature stages. Moreover, a detailed examination of the business environment shows that refining the investment and financing environment, enterprise market environment, government intervention environment, and population consumption environment substantially bolsters companies' strategic focus. This research offers theoretical and empirical support for enhancing corporate strategic focus and promoting orderly development.

Suggested Citation

  • Deshuai Hou & Junnan Yan & Manru Dong, 2024. "Business environment optimization and corporate strategy “Entropy Change”-based on the perspective of corporate strategic focus," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 14(4), pages 1093-1121, December.
    • Handle: RePEc:spr:eurasi:v:14:y:2024:i:4:d:10.1007_s40821-024-00281-8
    DOI: 10.1007/s40821-024-00281-8
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