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How performance pressure influences firms’ cross-boundary growth: the moderating effect of managerial discretion

Lin Yang (School of Business Administration, Nanjing University of Finance and Economics, Nanjing, China)
Jingyi Yang (International Business School, Xi’an Jiaotong-Liverpool University, Suzhou, China)
Liangliang Lu (School of Business, Shanghai University of Finance and Economics, Shanghai, China)
Shouming Chen (School of Economic and Management, Tongji University, Shanghai, China)

Chinese Management Studies

ISSN: 1750-614X

Article publication date: 2 August 2023

171

Abstract

Purpose

In today's complex and rapidly changing business environment, cross-boundary growth is increasingly critical to the survival or even success of organizations. The purpose of this study is to examine the forming mechanism of firm’s cross-boundary growth by integrating the two important antecedent factors of performance pressure and managerial discretion into a united framework and theoretically analyze the direct role of performance pressure on firm’s cross-boundary growth as well as reveal the moderating role of managerial discretion. Also, the authors select listed manufacturing companies in China as samples to empirically test the research hypotheses.

Design/methodology/approach

The authors design a multiple regression model to perform empirical analysis by using a panel of 4,002 year-observations in 1,334 listed manufacturing companies between 2013 and 2016. The sample data sources mainly come from the Wind Database, which is mainland China's leading financial database and software services provider. The hypotheses proposed are tested by adopting a panel data set of the listed manufacturing companies of China.

Findings

Empirical results show that performance pressure has a positive effect on the cross-industry growth and cross-domestic regional growth but a negative effect on the cross-international regional growth, and managerial discretion has a different moderating effect. Specifically, capital intensity strengthens the positive effect of performance pressure on cross-industry growth but weakens the negative effect of performance pressure on cross-international regional growth. State ownership enhances the positive effect of performance pressure on cross-domestic regional growth but decreases the negative effect of performance pressure on cross-international regional growth. CEO duality increases the negative impact of performance pressure on cross-international regional growth.

Practical implications

This study provides several implications for top executives, including how to dialectically consider the double-edged effect of performance pressure on cross-boundary growth of firms, create an appropriate environments of managerial discretion and design the types of cross-boundary growth strategies that top executives can follow in the volatility, uncertainty, complexity and ambiguity era.

Originality/value

Although the relevant literature highlights the importance of performance pressure, it has not been related to the cross-boundary growth of firms. This paper makes an incremental contribution to the literature on the forming mechanisms of firm’s cross-boundary growth by providing an important perspective of performance pressure to firm growth determinants and taking into account the moderating role of managerial discretion.

Keywords

Acknowledgements

This work was supported by the Key Project of National Social Science (grant numbers AGL22019).

Citation

Yang, L., Yang, J., Lu, L. and Chen, S. (2023), "How performance pressure influences firms’ cross-boundary growth: the moderating effect of managerial discretion", Chinese Management Studies, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/CMS-12-2022-0425

Publisher

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Emerald Publishing Limited

Copyright © 2023, Emerald Publishing Limited

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