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

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

International Review of Financial Analysis, 2025, vol. 100, issue C

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.

Keywords: Customer risk; Enterprises' strategic change; Business risk; Financing constraints; Supply chain contagion effect (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:100:y:2025:i:c:s1057521925000687

DOI: 10.1016/j.irfa.2025.103981

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