The Impact of Environmental Uncertainty on Corporate Innovation: Empirical Evidence from an Emerging Economy

Jinyong Chen, Weijia Shu, Xiaochi Wang, Muhammad Safdar Sial, Mariana Sehleanu and Daniel Badulescu
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Jinyong Chen: Business School, Hubei University, Wuhan 430000, China
Weijia Shu: Business School, Hubei University, Wuhan 430000, China
Xiaochi Wang: Business School, Hubei University, Wuhan 430000, China
Muhammad Safdar Sial: Department of Management Sciences, COMSATS University Islamabad (C.U.I.), Islamabad 44000, Pakistan
Mariana Sehleanu: Department of Economics and Business, Faculty of Economic Sciences, University of Oradea, 410087 Oradea, Romania

IJERPH, 2021, vol. 19, issue 1, 1-22

Abstract: The paper analyzes the effect of environmental uncertainty on corporate technological innovation from the perspective of an innovation value chain under the institutional background of China. This paper not only discusses the intermediary effect of agency problems on environmental uncertainty and corporate technological innovation but also deeply explores the influence of information transparency, government subsidies, and other mechanisms to alleviate agency problems on environmental uncertainty and corporate technological innovation. We use the data of listed companies in China from 2008 to 2019 as the research sample, and the results show that, in general, environmental uncertainty has a negative effect on both input and output of technological innovation, and the negative effect can last for two years. Further research shows that the agency problem has an intermediary effect on the environmental uncertainty and corporate technology innovation, and the environmental uncertainty aggravates the agency problem, which hinders the input and output of corporate technology innovation. As an important mechanism to alleviate the agency problems, information transparency and government subsidies can effectively alleviate the agency conflict, thus reducing the inhibition of environmental uncertainty on the input and output of technological innovation. Our findings contribute to the discussion of driving factors for technological innovation in the context of China’s system. Our results provide useful insights into the link between environmental uncertainty and corporate innovation for economic academics and practitioners alike.

Keywords: environmental uncertainty; information transparency; enterprise technology innovation; government subsidies (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2021
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