Subsidiary Performance Decline And Problem Search Decision Preference

As an important form of organization to make up for the imperfect market system,enterprise group has developed into the backbone of China's national economy.Among the existing listed companies,more than 90%of them belong to enterprise groups.Their strategic decisions are not only influenced by their own resources and capabilities,but also depend on the internal capital market environment of the enterprise groups they are in.As one of the important reference points for the company's strategic decision,the performance feedback of the subsidiary,especially when the company's performance is faced with negative feedback,has an important influence on the company's problem search decision.Most of the existing literatures study the relationship between corporate performance feedback and strategic decision-making behavior from the perspective of individual companies,but few interpret the performance feedback and strategic decision-making of subsidiaries from the perspective of enterprise groups,ignoring the important environmental factors that subordinate subsidiaries to enterprise groups.Are there differences in problem search decision preferences among subsidiaries of enterprise groups in the face of declining expected performance?How does the position of the subsidiary in the enterprise group affect its decision preference of problem search?None of these questions has been answered.Behavioral Theory of the Firm is that when a company does not match the actual performance and expected performance,the company will have different decision-making behavior:when actual performance is higher than expected performance,company managers tend to keep the status quo,follow the rules of the past and strategic decision,when actual performance is lower than expected performance,company managers risk bearing ability,will be a change in strategy in order to improve the situation.According to the Search Theory,when the company's operating performance is poor,the company will launch a problem search mechanism.The company can not only choose when to search,but also choose where to search.The search can be conducted not only in the technical field,but also in the market field.Based on this,this paper discusses the problem search decision preference of subsidiaries in the face of expected performance decline,as well as the regulatory role of subsidiaries in the level of the enterprise group and the business correlation between subsidiaries and the parent company.Through the empirical analysis of all a-share listed subsidiaries in China's Shanghai and Shenzhen stock exchanges from 2012 to 2018,the following conclusions are drawn:(1)there is a positive correlation between the degree of decline of subsidiary performance and the intensity of technical search,that is,the greater the degree of decline of subsidiary performance,the greater the intensity of technical search;(2)there is a positive correlation between the degree of decline of subsidiary performance and the intensity of market search,that is,the greater the degree of decline of subsidiary performance,the greater the intensity of market search;(3)when the performance of subsidiaries declines,compared with technical search,subsidiaries are more inclined to conduct market search;(4)when the performance of subsidiaries declines,the level of subsidiaries has a significant negative regulating effect on the intensity of technical search,that is,the lower the level of subsidiaries is,the more unfavorable it is for technical search,while the level of subsidiaries has no significant positive regulating effect on the intensity of market search;(5)when the decline in corporate performance,the subsidiary of relevance to the business of the parent for the intensity of search in the market have a significant positive regulation,namely the subsidiary and parent company,the higher the business relevance,the more conducive to market to search,and the intensity of subsidiary and parent company business relevance for technology search,there is no significant negative regulatory role.It is expected that the research conclusion can enlightens the group company on how to guide its subsidiaries to search for problems,so that the group company can carry out contingency control over its subsidiaries in a more differentiated way.