Research On The Protective Effect Of Enterprise Resource Integration Capability On Firm's Market Value Under Crisis Scenario

With the continuous development of the world economic integration and economic globalization,Chinese firms are facing more and more risks and challenges.In the face of a complex and changeable market environment,any abnormality of factors may trigger a chain reaction and cause a corporate crisis.Corporate crisis belongs to a sudden,visible,potentially destructive and highly uncertain event.The outbreak of crisis events often interferes with the daily operation of the firm,triggers a large number of negative reports on the firm by various information media,destroys the trust of stakeholders of firm,and ultimately destroys the market value of firm.Therefore,effective identification of key factors that affect the firm value at the onset of a crisis is of vital importance to the survival and development of firm.As a reflection of corporate capability of comprehensively utilizing external and internal effective resources,the capability of enterprise resource integration is also crucial to the survival and development of the firm.Although past studies have extensively discussed the positive influence of enterprise resource integration capability on firm value in the daily operation process,its protective effect on firm value under the crisis scenario is still unknown.Based on this,this paper focused on the protective effect of enterprise resource integration capability on firm's market value under crisis scenario.According to the sorting and summarizing previous related research literature,this study mainly focused on the protective effects of three important aspects of enterprise resource integration capabilities,that is,internal resource allocation capability,identification and acquisition capabilities of ownership stakeholder resource,and identification and acquisition capabilities of economic dependence stakeholder resource,on firm's market value when a crisis erupts.To do this,this research respectively selected an important indicator for the above three dimensions,namely,corporate unrelated diversification level,the political ties of substantial shareholder and corporate market position,and explored the protective effects of the three indicators on firm's market value in the crisis scenario.Specifically,this article mainly studies the following:Firstly,this article explored the protective effect of corporate unrelated diversification level on the firm's market value under the crisis scenario.This section took 203 crises occurred in listed companies in China from 2008 to 2018 as samples.This part of research found that corporate unrelated diversification level will positively affect the response of corporate stakeholders to the crisis when a crisis occurs,thereby protecting the firm's market value.Meanwhile,the positive effect of unrelated diversification is only effective when the firm's transparency is high.In addition,this part of research also found that when the cause of the crisis is attributed by stakeholders to knowledge deficiencies that are more difficult to be resolved by the firm,the negative impact of the crisis on the firm's market value will be stronger.In this case,the positive effect of corporate unrelated diversification level on the firm's market value will also be invalid.Secondly,this article explored the protective effect of political ties of substantial shareholder on firm's market value under crisis scenarios.This part of research took 153 crisis events of listed Chinese enterprises owned substantial shareholders with corporate legal person structure from 2008 to 2018 as samples,and explored the influence of political ties of substantial shareholder and the different dimensions of inter-organizational relationships on firm's market value at the onset of a crisis.Firstly,by identifying the ability signal of a firm to obtain political resources from its substantial shareholder,this part of research found that a higher tier of political ties owned by the substantial shareholder can effectively alleviate stakeholders'anxiety about the crisis and thus protect firm's market value at the onset of a crisis.Secondly,this part of research also identified two important inter-firm relationships—top management team(TMT)relationship and equity relationship,and found that these two inter-firm relationships have a "double-edged sword" effect on the firm's market value when the crisis breaks out.Finally,based on the interaction between the tier of political ties of substantial shareholder and inter-firm relationships,this part of research found that the positive role of political ties can only be more effective when the inter-firm relationships are strong.Finally,this article explored the protective effect of corporate market position on firm's market value under crisis scenarios.This section applied 203 crises occurred in Chinese public firms from 2008 to 2018 as samples.This part of research found that firms with a higher market position in the main business industry will suffer less losses under crisis scenarios.However,this positive effect of market position is only effective when the industrial munificence is high and the attribution of knowledge deficiencies is low.Based on the differentiated industry environment and stakeholders' different attributions of knowledge deficiency,this part found that external industry environment factors and internal knowledge management ability factors can all have important moderating effects on the impact of market position on firm's market value under crisis scenarios.Our innovation points and theoretical contributions can be summarized in the following three aspects:First of all,past literature that focused on the impact of enterprise resource integration capability on firm value tends to discuss its impacts on corporate daily operating performance from the perspective of corporate resource integration process.In this research,from the perspective of stakeholders'behavioral responses to corporate crises,this research mainly focused on the protective effect of enterprise resource integration capabilities on the firm's market value under crisis scenarios.Therefore,this study extends the strategic management research perspective of enterprise resource integration to the field of crisis management.Meanwhile,prior literature based on resource based theory(RBT),resource dependence theory(RDT)and dynamic capability perspective(DCP)often regarded the enterprise resource integration capability as a part of corporate resources,this study innovative regarded the enterprise resource integration capacity as an important signal that affects stakeholders' response to the crisis.Therefore,this research extends the theoretical research perspective related to resources to the research field of signal theory.Secondly,prior literature has extensively studied and discussed the influence mechanism of various enterprise resource integration capabilities on firm value based on the research background of corporate daily operation environment.However,few researchers have looked at whether these effects are still applicable in the context of corporate crisis.In view of this,the fundamental purpose in this study is to pay attention to the protective effect of various enterprise resource integration capabilities on firm's market value under corporate crisis scenarios.Therefore,this study enriches the exploring direction and application field of enterprise resource integration capability.Thirdly,in the past,most of the literature that focused on corporate crisis events tended to use cases or experiments to test single or several crisis events.Based on the method of event study in the empirical research,this research used the ordinary least squares(OLS)regression model to analyze the important factors influencing firm's market value when a crisis breaks out.In addition,in the process of exploring the event study method,our research also introduced some empirical test methodologies including Johnson-Neyman analysis and Heckman two-stage regression model to prove the robustness of empirical results in this research,which enriches empirical research methods in the field of crisis management research.The practical implication of this article can be summarized as follows:we regard the enterprise resource integration capability as an important signal that affects the response of stakeholders to a crisis when it occurs,and provide practical methods for firms to better carry out strategic management in the daily operation process to deal with sudden crisis events by exploring the protective effects of important indicators of three dimensions of enterprise resource integration capability on firm's market value under crisis situation.