Political uncertainty, innovation-driven strategy, and corporate R&D

Yang Cao, Yinghui Chen and Yuhe Zhang

Research in International Business and Finance, 2022, vol. 60, issue C

Abstract: This paper investigates how political uncertainty affects corporate R&D by exploiting the implementation of the national strategy of innovation-driven development (SID) and the timing of provincial leader turnovers in China as a source of plausibly exogenous variation in uncertainty. We find that uncertainty over provincial leader turnovers after the implementation of SID encourages firm R&D. Firms increase R&D investments by an average of 10.89% in turnover years relative to non-turnover years after the implementation of SID. The effect is stronger in firms subject to higher growth options and in state-owned enterprises.

Keywords: Innovation-driven strategy; Political uncertainty; R&D; Political turnover (search for similar items in EconPapers)
JEL-codes: G18 G38 O31 O38 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0275531921002336
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:60:y:2022:i:c:s0275531921002336

DOI: 10.1016/j.ribaf.2021.101612

Access Statistics for this article

Research in International Business and Finance is currently edited by T. Lagoarde Segot

More articles in Research in International Business and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().