Strategic Responses to Competitive Pressure: The Case of Township and Village Enterprises in China

Abstract

This study assesses the configuration between strategic orientation and industrial environment for Chinese township and village enterprises (TVEs), the organizational form which has played an increasingly important role in Chinese economic development and structural reform. We argue that the complexity, dynamism, and hostility of the industrial environment influence TVE managers’ perception of competitive pressure, which in turn affects the firm’s strategic orientations such as innovativeness, proactiveness, risk-taking, and analysis. Our analysis, based on a survey of TVE managers in Tianjin and Jiangsu, demonstrates that complexity and dynamism of industrial competition have a systematically positive impact on TVEs’ innovativeness, proactiveness, risk-taking, or analysis. Environmental hostility is not significantly associated with any strategic orientations adopted by Chinese TVEs. Implications of the findings are discussed.