Economic Policy Uncertainty and Innovation: Evidence from China Energy Enterprises

This research investigates the correlation between economic policy uncertainty and corporate innovation by investigating Chinese energy enterprises yearly during the period from 2001 to 2019. The empirical finding shows a positive effect of economic policy uncertainty on energy corporate innovation (i.e. patent and R&D expenditure), no matter for the traditional energy sample or renewable ones. Next, we find a mediating effect of corporate social responsibility on the nexus between variables, in which higher corporate social responsibility promotes a positive effect on energy corporate innovation. We then examine the moderating effects of government subsidy and financial constraints, presenting that diminishing effects exist in the positive influence of economic policy uncertainty on energy corporate innovation. We also divide the time period into before and after the 2008 global financial crisis and employ a new and more detailed economic policy uncertainty index for robust analysis. Overall, we demonstrate a positive nexus between economic policy uncertainty and energy corporate innovation variables and offer policy implications for governments and energy market participants.