Institutional Environment,diversification Strategy And Enterprise Growth

The No.1 document of the Central Committee in 2021 clearly proposes to comprehensively promote the revitalization of rural areas,speed up the modernization of agriculture and rural areas,build the standard system of the whole industrial chain of modern agriculture,and cultivate the standard "leader" of agricultural leading enterprises.The report of the 20 th CPC National Congress further proposes to give priority to the development of agriculture and rural areas and continue to promote rural revitalization in an all-round way.As the leading enterprises of agricultural industrialization,agriculture-related listed companies are the main force leading the overall revitalization of rural areas and the modernization of agriculture and rural areas,and the backbone of building the whole agricultural industrial chain and the construction of modern rural industrial system.It is an important main body to increase farmers’ employment and income,and plays an irreplaceable role in accelerating the all-round revitalization of rural areas.The sustainable and healthy growth and development of agriculture-related listed companies has increasingly become the focus of theoretical and practical circles.At the present stage,agriculture-related listed companies regard diversification strategy as one of the important strategies for enterprise development,and the academic circles have also studied and discussed the motivation and enterprise growth of agriculture-related listed companies to implement diversification strategy,while the existing literature mainly studies the weak and high-risk characteristics of agriculture in which agriculture-related listed companies are located.However,in China,which has the characteristics of both transitional economy and emerging market economy,the special formal institutional environment and the informal institutional environment represented by Confucian culture have an important impact on enterprise strategic decision-making.Will this special institutional environment have an impact on the diversification strategic decision-making of agriculture-related listed companies? What are the economic consequences of the diversification strategy of agriculture-related listed companies? Does it improve its growth? What is the inherent logical relationship between institutional environment,diversification strategy and enterprise growth? Further discussion is still needed.Motivated by these,based on the institutional basic view theory,transaction cost theory,principal-agent theory,brand theory and enterprise growth theory,Based on the formal institutional environment in the period of China’s transitional economy and the informal institutional environment represented by Confucian culture,and combined the characteristics of agricultural industry and agriculture-related enterprises,this thesis makes an in-depth analysis of the basic characteristics of the diversification strategy and enterprise growth of Chinese agriculture-related listed companies using the method of normative research and empirical research.At the same time,the influence mechanism of the formal institutional environment and informal institutional environment and their interaction on the diversification strategy of agriculture-related listed companies,the influence mechanism of diversification strategy on the growth of agriculture-related listed companies,the influence mechanism of formal institutional environment and informal institutional environment and their interaction on the growth of agriculture-related listed companies,and the action mechanism of formal institutional environment and informal institutional environment respectively affecting the growth of agriculture-related listed companies through diversification strategy are deeply analyzed.Through these analyses,the inherent logical relationship between the institutional environment,diversification strategy and the growth of agriculture-related listed companies is clarified,and the theoretical framework of this study is constructed.Based on the 2010-2019 data of 204 agriculture-related listed companies selected from the perspective of the whole industry chain,the empirical tests were carried out,and the main conclusions are as follows:(1)The number and diversification of agriculture-related listed companies are increasing year by year.The degree of related diversification of agriculture-related listed companies is higher than that of unrelated diversification.The diversification degree of mid-stream agriculture-related listed companies is the higher,while that of downstream agriculture-related listed companies is the lower,and that of upstream agriculturerelated listed companies is in the middle.The growth value of downstream agriculture-related listed companies is the higher,while that of mid-stream agriculture-related listed companies is the lower,and that of upstream agriculture-related listed companies is in the middle.The number of business industries and diversification entropy index have negative effects on the growth of agriculture-related listed companies.(2)The institutional environment has a significant impact on the diversification strategic behavior of agriculture-related listed companies.The formal institutional environment significantly suppresses the diversification strategic behavior of agriculture-related listed companies,and the transaction cost is the main path of the formal institutional environment to influence diversification strategic decision-making.The informal institutional environment significantly promotes the diversification strategic behavior of agriculture-related listed companies.Risk aversion is the main way for Confucian culture to influence diversification strategic decision-making.The interaction between formal and informal institutional environment has a complementary effect on the choice of diversification strategy.Heterogeneity test finds that the inhibition of formal institutional environment on the diversification strategy of agriculture-related listed companies will not be different due to the different links of the agricultural industry chain,the informal institutional environment plays a more significant role in promoting the diversification strategic behavior of mid-stream agriculture-related listed companies;The formal institutional environment has a more significant inhibitory effect on the diversification strategic behavior of private agriculture-related listed companies,informal institutional environment plays a more significant role in promoting the diversified strategic behavior of private agriculture-related listed companies.Further study finds that the formal institutional environment significantly suppresses the relevant diversification strategy and unrelated diversification strategy behavior of agriculture-related listed companies,but the inhibitory effect on unrelated diversification strategy is more significant.The informal institutional environment significantly promotes the relevant diversification strategy behavior of agriculture-related listed companies,but the promotion effect on the unrelated diversification strategy is not significant.(3)Diversification strategy has a significant impact on the growth of agriculture-related listed companies.The diversification strategy significantly suppresses the growth of agriculture-related listed companies,and this inhibition shows a certain lag and long-term nature.Heterogeneity test shows that diversification strategy has a more significant inhibitory effect on the growth of down-stream agriculturerelated listed companies;There is no property right difference in the inhibitory effect of diversification strategy on the growth of agriculture-related listed companies.Further study finds that related diversification strategies and unrelated diversification strategies also significantly inhibit the growth of agriculture-related listed companies,but unrelated diversification strategies have a more significant inhibitory effect on the growth of agriculture-related listed companies.(4)The institutional environment has a significant impact on the growth of agriculture-related listed companies.The formal institutional environment and informal institutional environment significantly promotes the growth of agriculture-related listed companies;the interaction between formal and informal institutional environment has a complementary effect on the growth of agriculture-related listed companies.Heterogeneity test finds that the formal institutional environment plays a more significant role in promoting the growth of mid-stream agriculture-related listed companies,the informal institutional environment plays a more significant role in promoting the growth of mid-stream agriculture-related listed companies;Formal institutional environment plays a more significant role in promoting the growth of private agriculture-related listed companies,the promoting effect of informal institutional environment on the growth of agriculturerelated listed companies has no heterogeneity of property rights.(5)Diversification strategy(including related and unrelated diversification strategies)is an effective way for institutional environment to affect the growth of agriculture-related listed companies.Diversification strategy plays a "partial intermediary effect" in the process of formal institutional environment affecting enterprise growth,a good formal institutional environment improves the growth of enterprises by reducing the diversification of agriculture-related listed companies.Diversification strategy shows a "masking effect" in the process of informal institutional environment affecting enterprise growth.The informal institutional environment reduces the growth of agriculture-related listed companies by increasing the degree of diversification,but at the same time,there is also a positive effect path of informal institutional environment on the growth of agriculture-related listed companies,and the effect of this masked path on the growth of agriculture-related listed companies is greater than that of diversification,which reduces the growth of agriculture-related listed companies.In the end,the greater the environmental impact of informal institutions,the higher the growth of agriculture-related listed companies.Based on the above research conclusions,this thesis puts forward the corresponding policy suggestions from the following four aspects: focusing on the main business and optimizing the diversification strategic behavior,constantly improving the construction of formal institutional environment,carrying forward the positive role of excellent traditional Confucian culture,and paying attention to the coordinated and complementary development of formal institutional environment and informal institutional environment.It also points out the shortcomings of this study and the possible research direction in the future.