Research On The Mechanism Of The Business Model Of "equal Emphasis On Righteousness And Profit" Affecting Corporate Financial Performanc

Innovation is the key to implementing the new development concept,promoting high-quality development and achieving modernisation.Along with the application of new technologies,the popularity of mobile internet and the need for industrial transformation and upgrading,more and more new "species" have emerged,and academics have realised the importance of this issue and have carried out A wealth of research has been conducted on the value creation of these ’new species’ of business models.While most of the literature focuses on the business models of platform companies,very little focuses on equity investment companies,it is worth noting that the rapid development of the ’new species’ of business model innovation studied in the literature has been made possible by the help of private equity funds.Based on theories of social embeddedness,social networks and social capital,this paper summarises the logic of value capture in the business model innovation of the equity firm Huaxing Capital.Based on Coase’s(1960)view that in the process of a transaction,both parties need to pay for information search,negotiation costs before signing a contract and supervision costs to monitor the execution of the contract,Huaxing Capital takes the Chinese Confucian concept of righteousness and profit as its business ethics,embeds social factors such as emotion and trust into the transaction form,gradually forms a network of customer resources,and then uses this competitive advantage to reduce transaction costs.In addition,this righteousness and profit-oriented business model can effectively improve the financial performance of enterprises.In this paper,we use a combination of logical deduction and evidential verification to find that the business model of combining righteousness with profit ensures the sustainability of the growth of the company’s financial performance through the circle of friends effect,and improves the company’s resistance to financial risks through the lock-in effect.Finally,an extended analysis of the economic consequences of China Renaissance’s business model after it affects corporate financial performance is conducted.The study finds that there is a chain reaction in the effect of the business model on corporate financial performance,and the subsequent impact path is related to the stakeholders of the enterprise,specifically,it will have an incentive effect on employees by raising their work reward expectations;increase the value of the invested enterprise through the brand effect,and This is a logical basis for investors to pay "ground rent",as they are expected to generate higher returns for investors through past performance.Further,this paper finds that under this business model,Huaxing Capital cooperates with stakeholders in the form of a positive-sum game,and the surplus generated from the cooperation can facilitate the formation of a business model that values both justice and profit.This study expands the scope of research on business model innovation,and has implications for the application of social embedding,social network and social capital theories in business practice,and deepens the value generation path of the Chinese Confucian concept of righteousness and profit.Under the traditional Chinese culture of"righteousness",the "circle of friends" built on the basis of emotion and trust can effectively govern opportunistic behaviour and help reduce transaction costs caused by opportunistic behaviour in trading activities.