On The Moderating Effect Of The Board Structure To The Performance Of Strategic Change

Driven by external national legal system, control over the market, as well as internal company strategy needs, the effectiveness and influencing factors of the strategic involvement of board of directors has attracted more and more attention from theory and business circles.With the rapid development of economy and further expansion of the company size, strategy change is increasingly becoming one of the key elements of the overall development of many enterprises, coping with the rapid change of complex environment and intense market competition. Especially for the equipment manufacturing company, National Twelfth Five-Year Strategic Plan supports the transformation of manufacturing industry to the high-end, by which time the original production model will face enormous challenges, and the strategy change has become an inevitable trend along with the diversification of customer. Moreover, the results show that many enterprises have brought a qualitative improvement to the performance through strategy change following this background. However, there are also research and corporate practice cases that show the improvement a large-scale restructuring of strategy change has brought to the enterprise performance is not obvious, what is the reason for research differences of the performance of strategy change? And then, what is the root cause of the failure if strategic change can not bring a qualitative leap to the enterprise? Therefore, an effective way is that grab from the source of strategy change. In the corporate governance mechanism, the board of directors, acting as the tie between the business and the interests of shareholders, has absolute control over the formulation and review of strategy change decision-making program. Therefore, how to improve the board of directors so as to improve the performance of strategy change has caused great concern of business community and academia. As an important part of the board governance, reasonable and effective board structure will produce a crucial impact on the performance of strategy change and play an important role in the regulation. Based on the above background, there are mainly three points of the purpose of this research:first, research the impact that strategy change has brought to business performance. Second, what is the adjustment effect that board structure has brought for the performance of strategy change. Third, whether strategy change of board of directors has more involved in corporate-level strategy change, and what is the effect that the fusion of supervision and governance functions of board and service functions of strategy change has brought to board strategy change. For the research purposes, this article will explore from three parts. First, this article subdivided strategy change into corporate layer strategy change and management layer strategy change, to verify the different impact that different types of strategy change degree might bring on business performance. Second, this article select board size, the proportion of independent directors, and two hats of chairman of the board and general manager from board structure, which are interacted with the degree of corporate layer strategy change and the degree of management layer strategy change, to examine the moderating effect that board structure has brought to the performance of corporate layer strategy change and management layer strategy change. Third, finally, by contradistinction and summary of the moderating effect, it verified whether board strategy change is more involved in the corporate-level strategy change, and it concluded that governance functions of the board not only have compatibility with functions of strategy change, but the integration of the functions will help improve the effect of board strategy change.Around the research, the research process and framework will follow:(1) introduction and question are raised:it mainly elaborates the research background and research purposes, the contents and significance of the research, research methods and research process, and also it summarizes the main difficulties that it intends to break through and innovations.(2) literature review:it reviewed the relevant literature on strategy change, relationship between strategy change and firm performance, as well as the relationship between the board structure、 strategy functions and corporate performance at home and abroad, this part will be elaborated in detail in the second chapter.(3) conceptual models and theoretical assumptions:through deep analysis of three classical theories which are strategy change theory、resource dependence theory and principal-agent theory based on rational perspective, and through summary of the relationship theory between board structure and strategy change and corporate performance, it proposed the conceptual model and the hypotheses of this article. This section will be described in detail in the third chapter.(4) research design and model building:it mainly describes the definition of the variables and measurement methods, as well as sample selection and collection and analysis of the data, and build an test empirical model for the hypotheses proposed. This section will be highlighted in the fourth chapter.(5) empirical research and results analysis:the part mainly gave a descriptive statistic of sample and a correlation test among variables, and it analyzed the empirical results by the multiple regression method. This section will be described in detail in the fifth chapter.(6) research conclusions and research prospects. The part mainly introduced the major conclusions of this paper as well as deficiency and prospects of this research. Through the brief description above, you will clearly see that part three、part four and part five will be the core chapters of this article.According to the research, the paper mainly used empirical research methods, which formulate hypotheses and build models based on previous research literature, and then it selected equipment manufacturing listed companies in Shanghai and Shenzhen as samples, and used SPSS tools for data analysis and hypothesis testing, in order to come to useful results of regulating effect of performance that board structure has brought to strategy change. It also hoped that the following conclusions of this paper would be helpful for the transformation practice of listed companies on equipment manufacturing industry in China.In the equipment manufacturing industry, the greater the degree of management layer strategy change, the more performance it will bring to the enterprise in the short term,but the corporate level strategy change will not bring immediate effect to the enterprise. And by findings of moderating effect, the expansion of the board size in the board structure will weaken the performance of the corporate-level strategy change, and it will not bring regulation to the performance of business layer strategy change. However, a higher proportion of independent directors have a significant positive moderating effect on the performance of corporate-level strategy change, while the effect on the performance of management layer strategy change is not obvious. And it found that the separation of the chairman and general manager plays a positive regulating effect on both performance of corporate-level strategy change and performance of management layer strategy change. Finally, through comparison and summary of the adjustment effect that board structure has brought to performance of corporate-level strategy change and performance of management layer strategy change, it finds that the more board involved in the level of corporate-level strategy change and the fusion of board governance function with the function of corporate-level strategy change, the better it promote the development of enterprises.Since this article begins its research from the angle of compatibility between board function and strategy change function based on the source of strategy change, and there is less research literature at home and abroad in this area, this paper belongs to an exploratory study, and it just select a single annual cross-sectional data of the equipment manufacturing industry, whose broad applicability need further expand the sample test. However, by exploring the regulatory role of board structure for the performance of strategy change, it verified that the function of the board should be changed from supervision and governance in the past to dual functions of which the governance function is compatible with the strategy change services, and this may become an innovative point of this article. And it also learns from the empirical measurement model of strategy change from abroad, which can make strategy change more subdivided and microcosmic, it hopes that, the study of strategy change in the domestic would have a micro-depth development, and the research method can be changed from qualitative research to quantitative research together with qualitative research gradually in the field of strategic change. At the same time, it hopes that, the research on regulatory role of the board structure for the performance of strategy change, can deepen the research areas of corporate governance, and make the corporate governance more perfect, so as to provide theoretical value for many enterprises to absorb and learn from, and create a greater value for shareholders, enterprises and society.