Strategic Deviance, Diversification and Enterprise Resilience in the Context of COVID-19: Heterogeneous Effect of Managerial Power

ABSTRACT

This article analyses the role of strategic deviance, diversification, their interaction, and managerial power on enterprise resilience (ER) during COVID-19. Using an event study approach and regression analysis based on the Chinese stock market, our findings show: (1) strategic deviance and diversification significantly, positively affect ER, while their interaction term’s effect is significantly negative; (2) when managers are powerful, diversification’s impact on ER is insignificant, while strategic deviance has a significant positive impact; (3) when managers are less powerful, strategic deviance’s influence on ER is not significant, while diversification is significant. Therefore, strong-managerial enterprises should adopt strategic deviance, while weaker-managerial enterprises should diversify.

KEYWORDS:

• Strategic deviance
• COVID-19
• enterprise resilience
• diversification

JEL:

• G14
• G34
• C33

Acknowledgments

We thank the editor, reviewers, and discussants for their helpful comments. All errors are our own.

Declaration of Interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Notes

1. This survey is called “The Impact of the 2020 Pandemic on China’s Listed Companies.” Detailed reports are available at https://www.iimedia.cn/c1061/72610.html.

Additional information

Funding

This work was supported by the National Social Science Fund of China [No. 19BGL076], the National Natural Science Foundation of China [No. 72002141], the Beijing Social Science Fund [No. 20GLA074], and funding from the Capital University of Economic and Business as Fundamental Research Funds for Beijing Universities.