Be cautious or win in danger? Firms’ economic policy uncertainty perception and green technology innovation

Yanmin Shao () and Kunliang Xu ()
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Yanmin Shao: University of Science and Technology Beijing
Kunliang Xu: University of Science and Technology Beijing

Asia Pacific Journal of Management, 2025, vol. 42, issue 3, No 1, 1163-1195

Abstract: Abstract Synthesising insights from threat-rigidity theory, this study explores the impact of firms’ economic policy uncertainty (EPU) perceptions on their green technology innovation (GTI) performance. By regarding EPU as an individualised perception rather than the homogeneous and macro factor in previous studies, we theorise that an increase in EPU perception will trigger a threat-rigidity effect and drive the firm to avoid participating in GTI activities featured by technological and environmental externalities. Furthermore, we find that environmental governance performance and state ownership can mitigate the threat-rigidity effect of EPU perception on GTI. Using a sample of Chinese listed manufacturing firms during 2011–2021, this study measures firms’ EPU perceptions at the micro level based on textual analysis of Management Discussion and Analysis texts, and draws evidence in support of the arguments. These findings provide significant insights for executives and government agencies to govern firms’ GTI when perceiving a turbulent economic policy environment.

Keywords: Economic policy uncertainty perception; Threat-rigidity theory; Green technology innovation; Environmental governance performance; State ownership (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10490-023-09944-y

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