How economic uncertainty affect enterprises' strategic orientation

Abstract

Global economic shocks exacerbated by increased geopolitical tensions unavoidably impact the economy. Currently, economic policy can function as a mechanism for governments to mitigate shocks and stabilize the economy. Frequent adjustments in economic policy might heighten the uncertainty encountered by economic agents. This article focuses on whether the unpredictability of economic policy poses a threat or an opportunity for firms and how it influences their strategic orientation. This study, based on A-share listed firms from 2012 to 2023, explores the relationship between economic uncertainty and enterprises' strategic orientation. Its findings reveal that economic uncertainty can transfer enterprises' strategic orientation from long-term benefits to short-term growth, known as the opportunity expectation effect. This effect is achieved by alleviating financial constraints and enhancing managers' myopia. Further analysis indicates that heterogeneous effects exist in different ownership and industry competitiveness.