Effects of firm characteristics on the link between business environment and operations strategy: evidence from China's retail sector

Abstract

Drawing on contingency theory, this study aims to examine the impacts of firm characteristics on the nature of relationships between business environmental factors and operations strategy choices. This study uses a path analytic framework to understand the effects for a sample of retail firms in China. Our findings suggest that the strongest business environmental factors that influence the degree of emphasis placed on operations strategy choices is environmental dynamism (such as changes in retail technology and innovations in new service development). When faced with the same environmental stimuli, firms with different firm characteristics (such as firm size, firm age, and firm nationality) choose to emphasise different operations strategies. For instance, the impact of labour availability on operations strategy choices is different for big and small firms. The effect of environmental dynamism on operations strategy choice seems to be much stronger for local firms than foreign firms in China. Compared with old firms, new firms appear to pay much more attention to competitive market forces during their operations strategy choices.