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The firms’ perception of global uncertainty and R&D investment: Evidence from China

Author

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  • Lu, Bing
  • Ren, Wanwan
  • Liu, Wenge

Abstract

This study explores how the firms’ perception of global uncertainty (FGU) affects R&D investment of listed firms in China. Our analysis is rooted in the understanding and measurement of FGU. Consistent with the theory of strategic growth, we find a significantly positive correlation between FGU and R&D investment. We further elucidate the mechanism underlining this correlation. When FGU increases, financing and labour resources are shifted towards R&D activities, promoting R&D investment. We also examine and explain how this correlation is magnified for firms in less competitive industries, those with higher tangible asset ratios, those related to states, and those with lower deleveraging levels. Finally, we divide FGU into five categories and investigate which subcomponent of FGU has the relatively greatest impact on R&D investment. FGU related to criminal and political events has a greater influence on R&D investment than other types of FGU.

Suggested Citation

  • Lu, Bing & Ren, Wanwan & Liu, Wenge, 2025. "The firms’ perception of global uncertainty and R&D investment: Evidence from China," Research in International Business and Finance, Elsevier, vol. 73(PA).
    • Handle: RePEc:eee:riibaf:v:73:y:2025:i:pa:s0275531924003714
    DOI: 10.1016/j.ribaf.2024.102578
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    Keywords

    Global uncertainty; Corporation innovation; R&D investment; Financial constraints; China;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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