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Are Firms More Willing to Seek Green Technology Innovation in the Context of Economic Policy Uncertainty? —Evidence from China

Author

Listed:
  • Mo Chen

    (School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China)

  • Xuhua Hu

    (School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China)

  • Jijian Zhang

    (School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China)

  • Zhe Xu

    (School of Business, East China University of Science and Technology, Shanghai 200237, China)

  • Guang Yang

    (School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China)

  • Zenan Sun

    (School of Management, Jiangsu University, Zhenjiang 212013, China)

Abstract

Frequent shifts in economic policies not only inject uncertainty into the economic landscape but also pose significant challenges to corporate endeavors in green technological innovation. Drawing on a dataset of Chinese A-share listed companies spanning 2008 to 2020, this research delves into the repercussions of economic policy uncertainty on the green technological pursuits of manufacturing firms and elucidates the underlying dynamics at play. The empirical evidence underscores a marked reluctance among companies to champion green technological innovation in the face of economic policy ambiguity, a stance that holds water even after rigorous robustness checks. Delving into the mechanisms, the study pinpoints heightened financial constraints and a diminishing risk appetite within the managerial ranks as pivotal deterrents steering firms away from green innovation projects amidst such uncertainty. Intriguingly, the adverse interplay between economic policy uncertainty and green innovation is especially accentuated in firms marked by tenuous government–business affiliations, pronounced monopolistic inclinations, lax intellectual property safeguards, minimal pollution footprints, and a skewed labor-to-capital composition. This investigation augments the scholarly discourse on the nexus between economic policy volatility and corporate green innovation, shedding light on strategic imperatives for emerging economies as they chart out future environmental blueprints and cultivate a conducive milieu for green innovation.

Suggested Citation

  • Mo Chen & Xuhua Hu & Jijian Zhang & Zhe Xu & Guang Yang & Zenan Sun, 2023. "Are Firms More Willing to Seek Green Technology Innovation in the Context of Economic Policy Uncertainty? —Evidence from China," Sustainability, MDPI, vol. 15(19), pages 1-24, September.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:19:p:14188-:d:1247585
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