The Impact Of Capital Structure On Product Market Competition Strategy

With the increasing competition in the market, for enterprises, especially listed companies in the market economy, how to accurately grasp the market trends and build competition advantage strategy has become the important concern of the business operators. And under the limited resources, the appropriateness of competition strategy choice determines the enterprise existence and long-term development can be sustained indefinitely. For a long time, research on the enterprise’s capital structure decisions and the product market competition strategy has been in two different areas respectively, until recent years, the development of western industry economic theory suggests that enterprise’s capital structure decision is based on the enterprise product market competition environment, corporate strategy and capital market environment factors, such as the comprehensive selection of corporate capital structure and product market competition exists between the inseparable connection. On the premise of the capital market is imperfect, capital structure will have a major impact on the goal, location, strength, strategy, behavior and performance of the enterprise in the product market competition, under different capital structure, enterprises’ market-competition behavior will be different. At present, there are more and more enterprises that take capital structure as an important strategic tool to affect the competition of product market. Therefore, the research on the impact of capital structure on product market competition strategy has a realistic significance. On the research content, we divide the enterprise competition strategy into cost leadership strategy and differentiation strategy, and we summarize the latest achievements of relevant theories and researches at home and abroad. Then we make assumptions on how capital structure affects the enterprise competition strategy, and build the corresponding panel data regression model. Finally, we make the empirical research using data of the listed companies of China’s manufacturing industry from2007to2011, the result shows that:First, Overall, the impact of capital structure on the cost leadership strategy and differentiation strategy is different. High debt level will cause enterprises to adopt more aggressive cost leadership strategy behavior, but more conservative differentiation strategy behavior. Second, further consideration under the condition of market structure, in the industry of low concentration, high ratio of property or high debt level make enterprises adopt cost leadership strategy actively, and take a conservative differentiation strategy, that is consistent with the overall; in the industry of high concentration, different from on the whole, high ratio of property or high debt level make the enterprise take conservative cost leadership strategy, and at this time, debt level has no significant effect on differentiation strategy.