Strategic Choices of Large Enterprises: An Economic Perspective: An Economic Perspective

Author: Ding Zhiming
Publisher:
Publish Date: 2004-05-01
Features: Analyzing a firm's strategic decision-making behavior can be approached from both internal influencing factors and external constraint factors. Internally, the preferences of corporate decision-makers and the goals they pursue form the foundation of strategic choices. Whether corporate decision-makers treat value maximization as the ultimate goal will lead to different evaluations of a given set of strategies. The extent to which decision-making preferences are influenced by specific socio-cultural factors is directly reflected in variables such as the firm's size, structure, and culture. Examining a firm's strategic choices from the perspective of the relationships among internal decision-makers necessitates studying the impact of their authority-responsibility allocation and checks-and-balances mechanisms on strategic decisions. This book employs economic theories such as the hypothesis of the rational economic person, the hypothesis of the social person, principal-agent theory, and transaction cost theory to analyze the internal factors influencing corporate decision-makers' strategic decisions, offering a novel perspective that highlights the study of human nature and principal-agent theory, demonstrating the vitality of these economic theories in analyzing corporate management activities.
From the perspective of external constraints, the efficiency goals pursued by firms are inevitably influenced by the costs of information and the nature of market structures. The costs of information and the characteristics of market structures are, in turn, dependent on the institutional supply provided by the government. The efficiency of institutional implementation by the government, of course, varies. The institutional constraints on corporate behavior are a comprehensive endeavor, with property rights institutions being at its core. This book analyzes China's property rights institutions in the context of current corporate strategic preferences, undoubtedly deepening understanding of the reform of state-owned enterprises. Given the government's significant influence in market competition, property rights definition, provision of public information, and maintenance of fairness, ensuring efficient institutional supply should become the main theme of China's future political and economic reforms. This is also the conclusion drawn from the book's use of microeconomic theories such as market theory, game theory, information economics, and new institutional economics to analyze the external constraints on corporate strategic decisions from multiple perspectives.