Strategic Emphasis and its Performance Implication: Difference between the US and China

Abstract

Prior studies examined the impact of strategic emphasis on firm performance predominantly with the data from a developed country like the US. Thus, there is little insight on strategic emphasis and its impact in an emerging market. This is an important research gap given the growing importance of emerging markets and the interdependence of economies across the nations. This study fills this research gap by examining the impact of strategic emphasis on firm performance with a sample of the Chinese firms, and further by comparing its impact between in China and the US. By analyzing 3,961 and 3,084 firm-year observations from China and the US, respectively, we found that strategic emphasis enhances the firm performance in China, and this positive link is stronger in China than in the US. We also found that the positive impact of strategic emphasis is mitigated when the firm is owned by the government (i.e., state-owned enterprise). Our findings provide implication for international business by suggesting that resource allocation between value creation and value appropriation should be different depending on the target market structure.