How and when economic policy uncertainty influences firms' strategic change: the role of CEO turnover and organizational inertia

Xi Zhong, Weihong Chen and Ge Ren

International Journal of Emerging Markets, 2021, vol. 18, issue 10, 3640-3656

Abstract: Purpose - Many studies have examined the antecedents of firms' strategic change on a micro and meso level, but few studies have explored it from the macrolevel (e.g. economic policy uncertainty) perspective. This research draws attention to the impact of economic policy uncertainty on firms' strategic change. Design/methodology/approach - This research empirically tests hypotheses based on a sample of listed firms in China during the period between 2010 and 2017. Findings - Based on real options theory, the authors theorize and find that economic policy uncertainty will negatively affect firms' strategic change through the mediating effect of CEO turnover. Moreover, organizational inertia will strengthen the negative impact of economic policy uncertainty on CEO turnover and will weaken the positive impact of CEO turnover on firms' strategic change. Originality/value - First, this research contributes to the strategic change literature by demonstrating the important impact of economic policy uncertainty on firms' strategic change. Second, this research expands the literature on the economic consequences of economic policy uncertainty. Third, this research clarifies the path and boundary conditions of economic policy uncertainty affecting strategic change by introducing the mediating effects of CEO turnover and the moderating effects of organizational inertia.

Keywords: Economic policy uncertainty; Strategic change; CEO turnover; Organizational inertia (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijoemp:ijoem-02-2021-0273

DOI: 10.1108/IJOEM-02-2021-0273

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