Economic policy uncertainty and corporate innovation: Evidence from China

This paper empirically examines the impact of the Chinese economic policy uncertainty (EPU) on corporate innovation. Using the EPU index that has been developed by Davis et al. (2019), and the data of Chinese A-share listed companies, we have found that the EPU is positively related to corporate technological innovation, and is negatively related to corporate business model innovation, in general. Furthermore, the rising market competition is also an important channel for firms to promote corporate innovation, particularly when they face a high EPU. The paper expands the understanding of corporate innovation, and also aims to enrich the empirical evidence that pertains to the impact of economic policy uncertainty, on corporate innovation.

Automated summary

This paper empirically examines the impact of Chinese economic policy uncertainty (EPU) on corporate innovation, finding that EPU is positively related to technological innovation and negatively related to business model innovation. Additionally, rising market competition is an important channel for firms to promote innovation, especially when facing high EPU.