Relationship Strength And Business Operating Performance

The competitive advantages make enterprises surive in the increasingly fiercecompetition in the market,and are going to be the key to the healthy development ofthe power companies. The rapid development of technology and constant opening upof new markets constitute a major competitive prospect in industries. The commercialnetwork is a competitive advantage.Later, the social network theory has beengradually paid much attention,applying the social network theory to explain economicbehavior′s “reasonableness” has become a hot topic in the field of socialeconomics.The theory of relationship strength has attracted scholars much attention,and has set off a wave of research in the field of management. Many scholars useempirical Analysis to analyze the relationship between the relationship strength andthe technological innovation, knowledge transposition′s efficiency. In the perspectiveof finance, how to measure the strength of the relationship between enterprises in theenterprise network, and how the relationship strength can influence the businessperformance,these problems are to be discussed and solved in this paperIn this paper, the study samples are manufacturing companies listed in Shanghaiand Shenzhen stock market’s from2008to2012. using the research of relationshipstrength in the sociological theory, the strength of the relationship will be dividedbased on the implementation of the objective and financial data. Firstly,therelationship between companies are divded into blood relationship (parent-subsidiaryrelationship) and non-kinship, Secondly, non-kinship are divided into friendrelationship (alliance partnerships) and general acquaintances and strangersrelationship (pure market trading relationship),Finally, empirical analysis are appliedto explan the relationship between the relationship strength and business performancefrom two aspects of operating results and operating efficiency. This paper use thefixed return on total assets (M-ROA) and days of operating working capital turnover(DOC) to measure the business operating performance. Based on reviewing theliteratures of research on the relationship strength and the creation of relationshipvalue, and through a series of theoretical analysis, this paper put forwards two basic hypotheses.They are hypotheses1: relationship strength is positively correlated withbusiness operating results. Hypotheses2: relationship strength is positivelycorrelated with business operating efficiency.The main contribution of this paper is to apply sociological theories to financialstudies, and use empirical analysis to explain how the different strength of therelationship impact on business operating performance. Previous research studied therelationship strength are focused on the field of management, questionnaires are usedto measure the strength of the relationship; path analysis is use to study therelationship intensity′s impact on competitive advantage, for example,knowledgetransferation and technological innovation. But few literatures study the relationshipbetween relation strength and business operating performance from the perspective offinance. Therefore, this article use the from objective financial data to classifyrelationshion, and to reveal how different types of relationship stength influencedifferent types of business performance, suggesting that companies will adoptdifferent mechanisms of relationship value depending on the strength of therelationship between enterprises.