Abstract
Purpose:
This study aims to theoretically hypothesize and empirically examine the impact of economic policy uncertainty (EPU) on firms' innovation performance as well as the contingency conditions of this relationship.
Design/methodology/approach:
This study collects and combines secondary longitudinal data from multiple sources to test for a direct impact of EPU on firms' innovation performance. It further examines the moderating effects of firms' operational and marketing capabilities. A series of robustness checks are performed to ensure the consistency of the findings.
Findings:
In contrast to the common belief that EPU reduces the innovativeness of firms, the authors find an inverted-U relationship between EPU and innovation performance, indicating that a moderate level of EPU actually promotes innovation. Further analysis suggests that firms' operational and marketing capabilities make the inverted-U relationship steeper, further enhancing firms' innovation performance at a moderate level of EPU.
Originality/value:
This study adds to the emerging literature that investigates the operational implications of EPU, which enhances our understanding of the potential bright side of EPU and broadens the scope of operational risk management.
This study aims to theoretically hypothesize and empirically examine the impact of economic policy uncertainty (EPU) on firms' innovation performance as well as the contingency conditions of this relationship.
Design/methodology/approach:
This study collects and combines secondary longitudinal data from multiple sources to test for a direct impact of EPU on firms' innovation performance. It further examines the moderating effects of firms' operational and marketing capabilities. A series of robustness checks are performed to ensure the consistency of the findings.
Findings:
In contrast to the common belief that EPU reduces the innovativeness of firms, the authors find an inverted-U relationship between EPU and innovation performance, indicating that a moderate level of EPU actually promotes innovation. Further analysis suggests that firms' operational and marketing capabilities make the inverted-U relationship steeper, further enhancing firms' innovation performance at a moderate level of EPU.
Originality/value:
This study adds to the emerging literature that investigates the operational implications of EPU, which enhances our understanding of the potential bright side of EPU and broadens the scope of operational risk management.
| Original language | English |
|---|---|
| Journal | International Journal of Operations & Production Management |
| Early online date | 8 Jan 2024 |
| DOIs | |
| Publication status | E-pub ahead of print - 8 Jan 2024 |
Bibliographical note
Copyright © 2023, Emerald Publishing Limited. This author's accepted manuscript is deposited under a Creative Commons Attribution Non-commercial 4.0 International (CC BY-NC) licence. This means that anyone may distribute, adapt, and build upon the work for non-commercial purposes, subject to full attribution. If you wish to use this manuscript for commercial purposes, please contact permissions@emerald.comKeywords
- Economic policy uncertainty
- Corporate innovation
- Organizational capacity
- Inverted-U relationship
- China