External Environment And Firm Growth

Firm growth can correctly reflect the capacity of firm’s sustainable development,it can not only predict the future development trend of the firm, but also can provideuseful reference information for the firm’s managers. As the firm’s value of the future,firm growth is not only the common concerns of the managers, employees andexternal investors, but also the firm’s long-term goal. The firm growth cannot not beseparated from the internal and external environment, while the external environmentis complex and changeable, in order to maintain firm’s competitive advantage, obtaingood performance and stable growth, that requires the firm to response rapidly. As forour country’s firms, in a transition period currently, more attention should be paid tothe study the relation between the external environment and firm growth.Based on the analysis of firm growth theory, from the five aspects of profitability,operating capacity, debt paying ability, investment reward ability and potentialdevelopment ability at the same time, I selected16financial indicators, usingprincipal component analysis, obtains the firm growth score. Choose the degree offinancial marketization, protection of the legitimate rights and interests of producers,government intervention in the market environment and market intermediary’sdevelopment to measure the external environment as financial services to the marketenvironment, the laws and regulations environment，the government’s interventionand social service environment,research on the relationship between the externalenvironment and firm growth, come to a conclusion: degree of financialmarketization, protection of the legitimate rights and interests of producers,government intervention in the market and market intermediary development andthe growth of enterprises have a significantly positive correlation, finally according tothe analysis result, put forward feasible suggestions to improve the externalenvironment for Chinese firms from four aspects.