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Trade policy uncertainty, political relations, and the survival performance of foreign-funded enterprises

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  • Yang, Lulu
  • Peng, Zijia

Abstract

Based on a sample of manufacturing foreign-funded export enterprises from China's industrial enterprise data spanning 2013 - 2023, this paper systematically explores the impact of trade policy uncertainty on enterprise survival performance, with political connections and marketing capabilities introduced as moderating variables. The study finds that trade policy uncertainty is significantly negatively correlated with both the profitability and innovation capabilities of foreign-funded enterprises, indicating that trade policy uncertainty increases enterprise operational risks and transaction costs, thereby suppressing enterprise profitability and innovation investment. Further analysis reveals that both political connections and marketing capabilities play significant moderating roles in the relationship between trade policy uncertainty and enterprise survival performance. Enterprises with political connections and strong marketing capabilities are better able to cope with trade policy uncertainty, maintaining relatively stable profitability and innovation capabilities.

Suggested Citation

  • Yang, Lulu & Peng, Zijia, 2025. "Trade policy uncertainty, political relations, and the survival performance of foreign-funded enterprises," Finance Research Letters, Elsevier, vol. 85(PE).
    • Handle: RePEc:eee:finlet:v:85:y:2025:i:pe:s1544612325015636
    DOI: 10.1016/j.frl.2025.108309
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    References listed on IDEAS

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