The Mechanism Of Firm Expansion Mode Selection

The expansion impulse of Chinese enterprises are very strong all the time.On the one hand,as the process of economic globalization is accelerating,world economic is integration is growing,and the globalization deepening including finance,investment,trade,production and others has brought new challenges for business expansion.On the other hand,the continuously push forward of China's industrial transformation and structural adjustment and the establishment of a multi-level financial system has brought new opportunities for business expansion.Enterprises mainly through its general expansion of internal and external expansion of mergers and acquisitions to achieve scale growth,It is necessary for the mode of expansion to adapt to the economic development at this stage and obey the long-term development strategy of the national economy,also it is necessary for the mode of expansion to take into account the development and their own growth needs of enterprises.Meanwhile,the selection of the business expansion mode can be influenced by internal resources and external environment and other factors.However,it is urgent need to investigate the realistic and the theoretical answer to what factors promote or inhibit the expansion of business scale and impact of expansive tendencies.In this paper,we focus on the core research question: the mechanism of firm expansion mode selection.We build a "from the inside to the outside" logical structure,from the persective of top manager characteristics,corporate characteristics,corporate governance,and external environment.We devide firm expansion mode selection into scale of generic expansion,the scale of M&A expansion,and expansion preference.We use A-share listing companies in Shanghai and Shenzhen stock market as research samples,from 2011 to 2013.The estimation models are choosen depending on the data distribution of dependent variables(including the scale of generic expansion,the scale of M&A expansion,and expansion preferance).The main conlusion including:(1)Top manager characteristics significantly affect expansion mode selection.First of all,the age and education of top manager have significant effects on the scale of generic expansion.Secondly,the characteristics of top managers have significant effects on the scale of M&A expansion.Finally,characteristics of directors do not have significant influence on expansion preference,and the homogeneity / heterogeneity of top management team have significant effects on expansion preferance.(2)Corporate governance significantly affect expansion mode selection.From the perspective of corporate governance and the scale of generic expansion: the proportion of the largest shareholder and the size of the board have negative correlation with the sacle of generic expansion;the proportion of the top ten shareholders,non-state-owned enterprises,the proportion of top manager shareholder,and activeties of board have positive correlation with the sacle of generic expansion.From the perspective of corporate governance and the sacle of M&A expansion,the proportion of the top ten shareholders,pay of top managers,size of independent directors inhibite the scale of M&A expansion;non-state-owned enterprises,the size of the board meeting have significantly role in promoting the scale of M&A.From the perspective of corporate governance and expansion preference,the non-state-owned enterprises,the lower pay executives,activity of board tend to grow through M&A.(3)External environment significantly affect expansion mode selection.Environmental Dynamism have opposite direction of effects on the sacle of expansion.When the external environment dynamism is high,large-scale of M&A accurs;when the dynamic external environment is low,large-scale of generic expansion accurs.Environmental munificence facilitates the scale of M&A expansion.When the industry competition if firce,companies tend to grow through generic expansion.Different sub-dimensions of institutional environment have different effects on firm expansion mode selection?(4)When executives make desicison on firm expansion mode,they not only have to take internal resource into account,but also need to cope with the external environment.In this research,we find the moderating mechanism of market environment and institutional environment.In addition,under different external environment characteristics,the degree and direction of the relationship among top manager characteristics and firm expansion mode selection are different.However,not every dimensions of external environment have the above moderating effect.Based and carried on existing research results,this paper strengthen the understanding of firm expansion mode selection and rich theoretical research results,from the following three aspects.(1)We expand the theory framework of firm expansion mode selection from internal to external,and from “individual->company->external environment”.which have not paid enough attention to antecendet factors.We systematically reveal factors that influence firm expansion mode selection.(2)Using listing companies in Shanghai and Shenzhen stock exchange market during 2011 to 2013,we reveral the mechanism of top manager characteristics,corporate governance,and external environment on firm expansion mode selection.We devide firm expansion mode into generic expansion and M&A expansion,then deepen into scale and preference.We enrich the research resultess of firm expansion strategy.(3)Based on the distribution of dependent variables,we adapt targeted and matching empirical econometric analysis models.When it comes to the selection of control variables,we gradually add explainary variables which were validated to have significant impact on the dependent variables.We build a more comprehensive and accurate measurement and estimation method to evaluate firm expansion mode selection.