Research On Pattern Recognition And Impact Mechanism Of Firm's Competitive Strategy From Financial Analysis Perspective

As the core of Porter's strategy theory,generic competitive strategy has become a hot spot for international and domestic researchers for over 30 years.A large majority of studies focus on the performance comparison in different competitive strategies,and only some scholars consider the environment as moderating effect on strategy.However,there are relatively few deep discussions on the mechanism of competitive strategy affected on performance.Moreover,there are almost no studies directly excavate the differences of influence factors according to panel data.Despite the accumulation of a large number of academic achievements,but there has not significantly promoted the knowledge process.The very problem lies in the lack of repeated conclusions based on subjective and blind strategy identification methods,which are difficult to be recognized.From the rigorous research paradigm,the theoretical construction of strategy identification is necessary to be proved by pure mathematical model at first,and then to be given the empirical test.It can be said that the scientific identity methodology is the basic premise to orderly develop competitive strategy both in theory and practice.This paper utilizes a recursive research paradigm that can be described as follows: firstly,constructs the strategy identification and examines its scientific nature by mathematical and empirical derivation,and then analyze the influence mechanism between strategy and performance.Using China automobile manufacturing listed companies from year 2007 to year 2014 as investigated object,the research content can be divided into the following two parts:The first part is the improvement and test of pattern recognition for competitive strategy identity.Firstly,combined with the natural needs of strategy,Palepu assumption from financial perspective is improved to be an identified index system only considering operating activities so as to give our strategy classifications.With this basis,the paper proposes the change pattern of competitive strategy based on the dynamic effects of time series.And then,the paper establishes a two oligopoly game model of non-differentiated and differentiated business,and its demand function,target function and equilibrium solution are derived through reconstructive Bowley utility function based on asymmetric substitutability.Furthermore,the paper introduces iso-performance constraint condition and constraint condition of price elasticity of demand so as to infer and verify the scientific nature of the Palepu assumptions.Lastly,the paper applies the two-stage identified approach to empirically test the Palepu assumptions which have been already proved mathematically.The second part is the influence mechanism of competitive strategy on firm performance.Firstly,the paper theoretically summarizes the relationship between competitive strategy and performance,management modes,capital structure and innovation respectively in order to propose the hypotheses,and a binary logit regression model is applied into China's automobile manufacturing listed companies to empirically investigate the influence factors gap among different strategies.Furthermore,the paper uses the sub-industry samples to carry out the robust test with the empirical results above.And then,following the identity results of competitive strategy as well as the empirical results of influence factors' differences,the paper constructs a regression model using capital structure as moderating variable to empirically test the moderator effects between strategy and performance,so do the same between strategy and innovation.On this basis,using innovation as mediating variable,the paper also investigates the mediator effect of innovation input on competitive strategy and firm performance by regression model,in order to explore the influence path of competitive strategy on performance.The findings significantly support the majority of research hypotheses,and well prove that there is good scientific design in this paper from methodologies to study framework based on financial perspective,and provide a new approach for Porter's competitive strategy identification,and enrich related researches on the characteristics and influence mechanism.Based on the analysis of this paper,the four main conclusions are given as follow.(1)Verifying the Palepu assumptions by mathematical model,and exporting the conditions of strategy identification in this paper.Operating asset turnover and operating profit margin are the financial driving factors respectively for cost leadership and differentiation strategy,and the hybrid strategy gains both advantages of cost leadership and differentiation,while non-strategy has none of financial driving factors.This is the first time to mathematically verify the method of strategy identity.(2)Supporting the Palepu assumptions by preliminary evidence.The paper utilizes the Palepu assumption mathematically proved and adopts the two-stage identity approaches to successfully recognize 57 China's automobile manufacturing listed companies during the period of 2007 to 2014,19 of which are the single-type competitive strategy that firms always stick to at the study period,and the rest 38 of which feature regular strategic change based on the time series.This is the first time to apply dynamic identification of competitive strategy.(3)Exporting the influence factors' differences of different strategies.Compared with cost leadership,differentiation strategy generally owns higher performance,and tends to adopt extensive management style and higher sales incentive.Moreover,differentiation strategy prefers to debt financing to develop financial leverage effect,and shows a more intense innovation willingness.The hybrid strategy is compatible with the cost leadership and differentiation.Due to the uncertain strategic direction,non-strategy features unstable characteristics in above four aspects.This is the first time to systematically excavate the factor's gap of competitive strategy from the financial perspective.(4)Revealing the influence path of competitive strategy on firm performance.Capital structure has significant moderating effect between the two pure strategy and firm performance.Moreover,capital structure moderates cost leadership and innovation,but there is no moderator effect on differentiation and innovation.Similarly,innovation input features a negative partial mediating effect between differentiation strategy and firm performance,which shows innovation input and performance are negatively correlated.However,there is no mediator effect on cost leadership and innovation.This is the first time to extend related study on the characteristics of competitive strategy.