Research On The Influence Of Executive Incentive On Enterprise Strategic Change

The global economic situation has been difficult in recent years and international competition has intensified.Uncertainties of all kinds have increased and represent a major challenge for our economic development.If we want to occupy a place in international competition,we must accelerate the pace of industrial restructuring to achieve high-quality economic development.As the backbone of national economic development and industrial structure adjustment,enterprises’ strategic changes affect the overall economic development level of the country.As planners of strategic decisions,managers play a critical role in resource allocation.However,strategic change is risky and its effects are uncertain,which affects the personal interests of managers in the short term,discourages their willingness to make strategic changes,and has a negative impact on the long-term sustainable development of the firm.Some theorists have studied the role of executives in corporate strategic choice,including their personal characteristics and cognition,and also explored the situational role of executive incentive in strategic change.However,the direct impact of executive incentive on corporate strategic change is still worth further exploration,including the impact of different incentive methods and the role of context.To this end,this paper develops a research model and conducts empirical tests using a literature review and inductive inference,empirically examines the mechanisms by which different incentive approaches influence firms’ strategy shifts using panel data on A-share listed firms from 2008 to 2020,and the environmental uncertainty and surplus resources in the moderating roles are explored.In addition,China has a special property rights background,we use cluster tests to examine the incentive effects of different incentive approaches with different ownership characteristics.the differential impact of managerial incentives across the different natures of property rights.First,there is an inverse U-shaped relationship between managerial equity incentives and firm strategic change,with a moderate intensity of equity incentives fostering strategic change,and both managerial compensation incentives and promotion incentives fostering strategic change activities.Second,environmental uncertainty strengthens the inverse U-shaped relationship between managers’ equity incentives and firms’ strategic change,making the slope of the curve steeper,and the relationship between managers’ remuneration incentives and strategic change,and between managers’ promotion incentives and strategic change,is negatively adjusted by environmental uncertainty be negatively moderated by environmental uncertainty.Third,surplus resources reinforce the inverse U-shaped relationship between managerial equity incentives and strategic change,making the curve steeper.Fourth,the effects of managerial incentives differ significantly across firms with different property rights: in state-owned firms,equity incentives,pay incentives and promotion incentives all positively promote strategic change,while in non-state-owned firms,equity incentives have an inverse U-shaped relationship with strategic change,pay incentives promote strategic change,while promotion incentives do not significantly promote strategic change.In non-state-owned enterprises,inverted U-shaped relationship between equity incentives and corporate strategy change,with pay incentives promoting strategic change and promotion incentives not significantly contributing to strategic change.This paper subdivides managerial incentives into equity incentives,remuneration incentives and promotion incentives,and analyses the mechanisms of the role of explicit and implicit managerial incentives,which contributes to enhancing research on managerial incentives and expanding the scope of research on the antecedents of strategic change.At the same time,this paper further introduces the environmental uncertainty and redundant resources of internal and external factors into the research framework of executive incentive and enterprise strategic change,which helps to clarify the situational factors and boundary conditions of different incentive methods affecting enterprise strategic change.The results of this work will help companies to make strategic changes and develop scientifically effective incentive agreements,which is conducive to listed companies to formulate appropriate incentive policies,optimize and adjust incentives to maximize the positive functions of corporate governance,so as to achieve incentive compatibility.Although this paper has carried out a relatively complete demonstration under the guidance of research questions,there are still shortcomings.The impact mechanism of combination incentive is not considered,and there may be complementary or substitution effects between different incentive methods.In the follow-up research,multiple incentive methods can be integrated to further explore the impact of combination incentive on enterprise strategic change,so as to provide suggestions for enterprises to develop more effective incentive schemes.