Based on the institutional theory, using the annual observation sample data of Chinese A-share private listed companies from 2016 to 2019, this paper examines the potential impact and mechanism of the development of cordial and clean government-business relationship on the strategic transformation of private enterprises from a comprehensive perspective of strategic change. The results suggest that the cordial and clean government-business relationship within a region is significantly correlated with the strategic transformation level of local private enterprises, indicating that such a relationship can assist private enterprises in achieving transformation and upgrading. Path analyses demonstrate that the main mechanism through which the cordial and clean government-business relationship improves the strategic transformation level of private enterprises enhances regional market vitality and mitigates financing constraints. Based on heterogeneous analyses, the positive impact of the cordial and clean government-business relationship on the strategic transformation of private enterprises is stronger in samples characterized by a higher level of regional marketization, non-technology-intensive industries, eastern-region enterprises, and higher management shareholding. Further, the results show that both cordial and clean government-business relationships can significantly promote the strategic transformation of private enterprises and complement each other. Finally, the study concludes that the cordial and clean government-business relationship has a significant positive impact on the industrial transformation and upgrading of the macro region, as well as high-quality economic development.

The findings offer timely experiential support and decision-making reference for building a cordial and clean government-business relationship and promoting the strategic transformation of private enterprises.