Abstract
This paper examines the effects of the pandemics-related uncertainty on corporate innovation in Chinese firms. For this purpose, the recent uncertainty measure of pandemics, the Pandemics Discussion Index (PDI), is used. The findings from the fixed-effects estimations show the negative impact of the PDI on corporate innovation. Government subsidies, operation profits, and total exports also positively affect corporate innovation. In addition, firms' management efficiency promotes corporate innovation. These results hold when the Blundell-Bond estimations are utilized to address potential endogeneity. Various robustness analyses, such as considering the lagged PDI and the lagged controls, are also conducted. Consequently, the main results remain robust. Thus, this paper provides novel and robust evidence on the negative impact of pandemics on Chinese firms' corporate innovation behavior.
Highlights
Corporate innovation is one of the main sources of economic growth [1, 2]
This paper aims to examine the effects of the pandemicsrelated uncertainty on corporate innovation in Chinese firms
We find a negative impact of the Pandemics Discussion Index (PDI) on corporate innovation
Summary
Corporate innovation is one of the main sources of economic growth [1, 2]. It provides the efficient reallocation of sources, and it can promote economic performance [3, 4]. Following the reform in 1978, the Chinese economy has rapidly grown with an average growth rate of around 10% over four decades [8]. This great growth performance has taken attention from academia and policymakers [9]. The sustainability of the corporate innovation process is vital for economic growth sustainability in China
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