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Political uncertainty and innovation of export enterprises: international evidence for developing countries

Author

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  • Fengxiu Zhou

    (Jiangxi Normal University)

  • Chien-Chiang Lee

    (Nanchang University
    Lebanese American University)

Abstract

Political uncertainty is a crucial disadvantage to the internationalization of enterprises in developing countries. Using data from a survey of World Bank in 106 developing countries from 2006 to 2020, this study empirically investigates the innovative behavior of export enterprises in response to political uncertainty. The empirical results illustrate that export enterprises significantly improve the probability of participating in product innovation activities and R&D innovation activities under higher political uncertainty. Export enterprises substitute for fixed asset investment by engaging in innovative activities that can mitigate the decline in exports in an uncertain political environment. Both financing constraints and domestic production competition significantly reduce the positive effect of political uncertainty on the innovation of export enterprises.

Suggested Citation

  • Fengxiu Zhou & Chien-Chiang Lee, 2023. "Political uncertainty and innovation of export enterprises: international evidence for developing countries," Economic Change and Restructuring, Springer, vol. 56(6), pages 4371-4400, December.
    • Handle: RePEc:kap:ecopln:v:56:y:2023:i:6:d:10.1007_s10644-023-09554-0
    DOI: 10.1007/s10644-023-09554-0
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    More about this item

    Keywords

    R&D innovation; Political uncertainty; Product innovation; Export enterprises; Developing countries;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • 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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