The Research On The Matching Between The Top Management Teams And The Strategic Choice Of China’s Automobile Industry During Economic Transition

Automotive industry plays an important role on China’s economic development because of its characteristics on high market association, long industrial chain, wide range of involved industries and strong consumers’demand pull. Since35years of reform and opening up, China’s automobile industry has developed rapidly, it has become the biggest automobile-producing country in the world. Now China is in the stage of economic transition, the automotive industry is also accelerating the pace of industrial restructuring. With increasingly complex external environment faced by the auto companies, CEO individuals cannot make accurate decisions by their own capability so that more and more companies begin to focus on the top management team. As company’s strategy makers, top management team determine future developing direction of the company at a large extent. However, what kind of top management team that companies should build to make their maximum effectiveness fully in order to accommodate the needs of company’s development? In other words, what kinds of relationship between top management team and strategic choice is a topic worthy of further study.This essay bases on high-level echelon theory and strategic choice theory, as well as the big macro background that China is in the economic transition, it selects the auto industry as the research object to study and explore the matching relationship between top management team and strategic choice through constructing a multi-class Logit regression model.The essay includes five sections:Chapter1is Introduction which introduces the background, significance, ideas, methods and possible innovations on the topics; Chapter2is Related Theoretical Review and Research Hypotheses which mainly discusses domestic and foreign researches on relationship between top management team and companies’strategic choice as well as the study on strategic choice of China’s automobile industry, based on which it proposes a hypothesis; Chapter3is Study Design which explains sample selection, definition and classification and measurement methods of independent variable, dependent variable and the control variables, and model construction in detail; Chapter4is Study Result which mainly concerns on descriptive statistics about independent variables and dependent variable, and also instructions of multi-class Logit regression results; Chapter5is Conclusions and Outlook which further analyses and discusses the regression results based on Chapter4, meanwhile it notes the shortcomings of this research and future research directions in this field.Through empirical analysis, hypothesis2and hypothesis6is partially validated, hypothesis5does not pass the significant test, and other assumptions are all verified. This essay eventually comes to the following conclusions:Firstly, the higher the average age of members from the top management team, they are more willing to choose related diversification strategy, product development strategy and market development strategy while making strategic decisions, but the members with lower average age are more inclined to adopt non-related diversification strategy and horizontal integration strategies; Secondly, the bigger the average size of top management team, they are more inclined to choose market development strategy, product development strategy and related diversification strategy, well, the team with smaller average size are more disposed to transverse strategies and unrelated diversification strategy; Thirdly, the higher the average education level of top management team, they are more in favor of market development strategy, horizontal integration strategy and unrelated diversification strategy, and the team with lower average education level are more likely to adapt vertical integration strategy, product development strategy and related diversification strategy; Fourthly, the greater the age heterogeneity of top management team, they prefer to choose strategies in the sequence of product development strategy, unrelated diversification strategy, vertically integrated strategy, horizontal integration strategy, related diversification strategy and market development strategies, and the smaller age heterogeneity is more inclined to choose in the reverse sequence; Fifthly, in a certain range, the higher heterogeneity on professional background of top management team, they are more inclined to adopt integrated strategies and unrelated diversification strategy, while the team with lower heterogeneity on professional background are more willing to choose related diversification strategy, market development strategy and product development strategies.On the basis of above analysis, the essay contains possible innovations as follows:firstly, in the view of sample selection, research on a single industry is rarely at home and aboard, while this essay selects China’s auto industry as the research object which makes research results more pertinent and practical; Secondly, in terms of research methods, this essay selects related data on the relationship of top management team and strategic choice from listed companies of the automotive industry for four consecutive sessions (12years), it test the correlation between the two aspects by constructing multi-class Logit regression equation, which is also rare in the related researches; Thirdly, from the viewpoint of the research results, the relationship between heterogeneity on professional background of top management team and corporate strategy selection is not ordinary linear related but "∩" relationship. This not only amends and supplements some parts of the existing conclusion, but also proves the necessity of researching the industries in classification.Meanwhile, this essay also has some limitations:Firstly, in terms of samples number, only48companies meet the requirements after filtration and total valid samples are only192, which shows that samples number is too small; Secondly, in terms of variables selection, this essay only considers characteristics of top management team that are commonly used by the academic field, and the selection of dependent variable and control variables still exist imperfections; Finally, in terms of research perspective, it is necessary to learn from abroad experience in examining the relationship between top management team and company’s strategic choice from different perspectives.