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The influence of trade policy uncertainty on corporate innovation strategies

Author

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  • Zheng, Fang
  • Chen, Xue
  • Sun, Yun

Abstract

This paper investigates the impact of rising trade policy uncertainty on the innovation activities of Chinese firms, focusing on A-share listed companies from 2012 to 2021. The study finds that increased trade policy uncertainty significantly stimulates innovation among Chinese firms, especially among non-state-owned enterprises. This effect is mediated through firms' financing constraints, as rising uncertainty leads to a reallocation of funds within firms, with the R&D sector receiving relatively less constrained financing. The results show that while both state-owned and non-state-owned enterprises benefit from uncertainty-driven innovation, the effect is more pronounced among non-state-owned enterprises.

Suggested Citation

  • Zheng, Fang & Chen, Xue & Sun, Yun, 2025. "The influence of trade policy uncertainty on corporate innovation strategies," Finance Research Letters, Elsevier, vol. 75(C).
    • Handle: RePEc:eee:finlet:v:75:y:2025:i:c:s1544612325001862
    DOI: 10.1016/j.frl.2025.106922
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    References listed on IDEAS

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