Business Strategy and Enterprises’ Ability of Sustainable Development: Evidence from China

Abstract

The present study was designed to investigate whether business strategy affects firms’ ability of sustainable development. Using a sample of A-share non-financial publicly listed firms in China, this paper shows that: (1) on average, there is a negative correlation between the choice of radical strategy and the sustainable development ability of enterprises; (2) compared with non-high-tech enterprises, the above relation is more pronounced in high-tech enterprises. The findings are also robust to endogeneity checks and alternative measures of firms’ sustainable development ability. Overall, this study indicates that business strategy plays a fundamental role in enterprise operations, and the choice of radical strategy will weaken the sustainable development ability of enterprises, especially in hightech enterprises. Therefore, this study suggests that in order to improve the sustainable development ability of enterprises, it is necessary to further optimize the strategic choice of enterprises and avoid using too many radical strategic types. Keywords—Business Strategy; Sustainable Development Ability; High-Tech Enterprises