Economic policy uncertainty and firm innovation: Evidence from a risk-taking perspective

Lou, Zhukun; Chen, Siyu; Wang, Yin; Chuan, Zhang; Yu, Xiaoyu

doi:10.1016/j.iref.2021.09.014

Cited by 113 publications

(80 citation statements)

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“…Because the increase in economic policy uncertainty makes the cost of capital for enterprises increase, which in turn reduces their innovation activities. Cui et al ( 2021 ), Guan et al ( 2021a ), and Lou et al ( 2022 ) also confirm that economic policy uncertainty is significantly negatively related with corporate innovation. In short, the increase of economic policy uncertainty restrains the innovation behavior of enterprises.…”

Section: Theoretical Mechanism and Hypothesis Developmentmentioning

confidence: 89%

“…Furthermore, the impact of economic policy uncertainty on PM2.5 pollution may also be heterogeneous and depends on countries' R&D input scale. Economic policy uncertainty hinders corporate innovation (Cui et al, 2021;Lou et al, 2022). Innovation, especially green technology innovation, could significantly reduce PM2.5 pollution (Feng et al, 2021;Shan et al, 2021;Chien et al, 2021;Khattak et al, 2022).…”

Section: Theoretical Mechanism and Hypothesis Developmentmentioning

confidence: 99%

See 1 more Smart Citation

The impact of economic policy uncertainty on PM2.5 pollution—evidence from 25 countries

Xin

2022

Environ Sci Pollut Res

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We conduct theoretical and empirical study on the impact of economic policy uncertainty on PM2.5 pollution. Economic policy uncertainty has important impact on PM2.5 pollution through investment channel and innovation channel. Specifically, according to real option theory, increase in economic policy uncertainty can reduce investment, thereby reducing PM2.5 pollution. However, increase in economic policy uncertainty can hinder corporate’s innovation activities, which in turn make PM2.5 pollution increase. Therefore, the impact of economic policy uncertainty on PM2.5 pollution depends on the combination effect of these two different effects. Furthermore, using 25 countries’ unbalanced panel data and fixed effects estimation methods, we empirically test the impact of economic policy uncertainty on PM2.5 pollution. The results show that, with the increase of economic policy uncertainty, countries’ PM2.5 pollution has significantly decreased. In addition, economic policy uncertainty has heterogeneous effect on countries’ PM2.5 pollution. Compared with countries who have higher R&D input, increase in economic policy uncertainty makes the reduction of PM2.5 pollution in countries with relatively lower R&D input higher. By changing the measurement methods of economic policy uncertainty and PM2.5 pollution indicators, and using 2SLS methods to estimate the models, the conclusions of the paper are robust. Finally, we put forward corresponding policy implications.

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Section: Theoretical Mechanism and Hypothesis Developmentmentioning

confidence: 89%

Section: Theoretical Mechanism and Hypothesis Developmentmentioning

confidence: 99%

The impact of economic policy uncertainty on PM2.5 pollution—evidence from 25 countries

Xin

2022

Environ Sci Pollut Res

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“…This study also has several practical implications. First, environmental uncertainty has brought great challenges to firm innovation (Yu et al, 2020 ; Lou et al, 2022 ). Therefore, uncertainties could lead to the unsustainability of innovative activities.…”

Section: Discussionmentioning

confidence: 99%

CEO Overconfidence, Corporate Governance, and R&D Smoothing in Technology-Based Entrepreneurial Firms

Huang

Wang

2022

Front. Psychol.

Self Cite

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The intertemporal stability of research and development (R&D) investment is a key issue in successfully promoting the continuation of innovation activities under high uncertainty in entrepreneurship. R&D smoothing helps firms to navigate the uncertainties of the external environment and maintain the stability of their investments in innovation. Chief executive officers (CEOs) are the most important decision-makers in firms' strategic planning. However, overconfident CEOs may overlook the importance of their firms' strategic actions on innovative activities. Drawing on upper echelons theory, this paper examines how CEO overconfidence affects firms' R&D smoothing. Using a sample of firms listed in China's Growth Enterprises Market between 2013 and 2020, this study finds that CEO overconfidence has a significant negative impact on R&D smoothing. Furthermore, our findings reveal that firms' internal control quality and institutional investor monitoring can mitigate the negative association between CEO overconfidence and R&D smoothing. Our findings provide new insights into the micro-level theoretical explanations for R&D smoothing and offer practical implications for technology-based entrepreneurial firms.

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“…EPU will increase management's risk aversion, which will make executives become more cautious about innovation decisions to avoid the risk of innovation failure. The research of Lou et al [77] also shows that EPU will have a negative effect on enterprise innovation. Since corporate inventions bring a series of improvements to the social medical technology and education level, these are all important factors to improve the social development index.…”

Section: The Impact Of Epu and Entrepreneurship On Social Developmentmentioning

confidence: 94%

The Triple Bottom Line of Sustainable Entrepreneurship and Economic Policy Uncertainty: An Empirical Evidence from 22 Countries

Pan

et al. 2022

IJERPH

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Based on the data of 22 different countries from 2005 to 2018, this paper mainly studies the influence of entrepreneurship on sustainability, and further explores the influence of Economic Policy Uncertainty (EPU) and the interaction effect between EPU and entrepreneurship on sustainability. The results show that EPU can promote economic, environmental, and social development, the interaction between EPU and green entrepreneurship is beneficial to social development, and the interaction between EPU and non-green entrepreneurship inhibits social development. For the heterogeneity analysis, 22 countries are grouped by high and low Human Development Index (HDI). The empirical results find that EPU has a better performance in low HDI countries than that in high HDI countries. In high HDI countries, the interaction between EPU and green entrepreneurship will weaken the positive effects of green entrepreneurship on the environment.

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Economic policy uncertainty and firm innovation: Evidence from a risk-taking perspective

Cited by 113 publications

References 50 publications

The impact of economic policy uncertainty on PM2.5 pollution—evidence from 25 countries

The impact of economic policy uncertainty on PM2.5 pollution—evidence from 25 countries

CEO Overconfidence, Corporate Governance, and R&D Smoothing in Technology-Based Entrepreneurial Firms

The Triple Bottom Line of Sustainable Entrepreneurship and Economic Policy Uncertainty: An Empirical Evidence from 22 Countries

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