Corporate Strategic Responses, Supplier Concentration and Sustainable Growth of Chinese Listed Firms

This study examines the impact of corporate business strategy on sustainable growth of Chinese listed non-financial firms from 2010 to 2017. Supplier concentration is used as a moderator to examine how company strategy responses affect sustainable growth. This study measures sustainable growth using a comprehensive index based on nine financial indicators. Using fixed effect model, findings reveal that firms choose a conservative corporate strategy in the presence of higher supplier-concentration, whereas aggressive strategy significantly improves sustainable growth. The findings also indicate that higher supplier-concentration has a drag effect on a firm’s growth sustainability as it weakens the positive relationship between corporates’ business strategy and sustainable growth. Our results are robust to time and industry fixed effects as well as alternate proxies of sustainable growth. This research contributes to the literature on firm strategic strategies in the presence of supplier concentration to achieve sustainable growth, which may assist managers to keenly observe their relationships with their suppliers to maintain a healthy business environment.