Risk expectation from trade protectionism and firm innovation strategies: Theory and evidence from China
In this study, we construct a new measurement of a firm's trade risk expectation. We investigate how exporters’ innovation strategies respond to trade protection and their risk expectation by studying the global anti-dumping investigations against China. Specifically, using information on targe...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Elsevier
2024-04-01
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| Series: | Journal of Innovation & Knowledge |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2444569X24000209 |
| _version_ | 1797234310215892992 |
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| author | Zeyang Li Feifei Fang |
| author_facet | Zeyang Li Feifei Fang |
| author_sort | Zeyang Li |
| collection | DOAJ |
| description | In this study, we construct a new measurement of a firm's trade risk expectation. We investigate how exporters’ innovation strategies respond to trade protection and their risk expectation by studying the global anti-dumping investigations against China. Specifically, using information on targeted products, we identify the trade risk level of each firm. We then develop a theoretical model to analyze how a multi-product firm adjusts its innovation strategies by its trade risk expectation when affected by anti-dumping measures, and the spillover effects of trade risk expectation on the firm's innovation strategies. This model predicts that first, affected firms will increase their R&D investment and innovation output in response to the increase of trade risk. Second, firms are more likely to choose high-quality innovation when their trade risk expectations increase. Third, for unaffected firms, an increase in trade risk expectation will lead to a growth in their innovation outputs. These predictions are aligned with the Chinese data, which are matched with an anti-dumping dataset from the Global Anti-dumping Database and several firm-level datasets. After changing the definition of trade risk expectation, excluding the cases also affected by countervailing measures and those with a zero anti-dumping tax rate, our results remain constant. This gives us further confidence that exporters with higher trade risks are more responsive to trade protection. |
| first_indexed | 2024-04-24T16:30:02Z |
| format | Article |
| id | doaj.art-07c4abdbc73c40f7927f411371ff9f3c |
| institution | Directory Open Access Journal |
| issn | 2444-569X |
| language | English |
| last_indexed | 2024-04-24T16:30:02Z |
| publishDate | 2024-04-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Journal of Innovation & Knowledge |
| spelling | doaj.art-07c4abdbc73c40f7927f411371ff9f3c2024-03-30T04:39:46ZengElsevierJournal of Innovation & Knowledge2444-569X2024-04-0192100480Risk expectation from trade protectionism and firm innovation strategies: Theory and evidence from ChinaZeyang Li0Feifei Fang1School of Statistics, Huaqiao University, Xiamen 361021, PR ChinaInternational School of Business & Finance, Sun Yat-sen University, Zhuhai 519082, PR China; Corresponding author.In this study, we construct a new measurement of a firm's trade risk expectation. We investigate how exporters’ innovation strategies respond to trade protection and their risk expectation by studying the global anti-dumping investigations against China. Specifically, using information on targeted products, we identify the trade risk level of each firm. We then develop a theoretical model to analyze how a multi-product firm adjusts its innovation strategies by its trade risk expectation when affected by anti-dumping measures, and the spillover effects of trade risk expectation on the firm's innovation strategies. This model predicts that first, affected firms will increase their R&D investment and innovation output in response to the increase of trade risk. Second, firms are more likely to choose high-quality innovation when their trade risk expectations increase. Third, for unaffected firms, an increase in trade risk expectation will lead to a growth in their innovation outputs. These predictions are aligned with the Chinese data, which are matched with an anti-dumping dataset from the Global Anti-dumping Database and several firm-level datasets. After changing the definition of trade risk expectation, excluding the cases also affected by countervailing measures and those with a zero anti-dumping tax rate, our results remain constant. This gives us further confidence that exporters with higher trade risks are more responsive to trade protection.http://www.sciencedirect.com/science/article/pii/S2444569X24000209D21F13L19 |
| spellingShingle | Zeyang Li Feifei Fang Risk expectation from trade protectionism and firm innovation strategies: Theory and evidence from China Journal of Innovation & Knowledge D21 F13 L19 |
| title | Risk expectation from trade protectionism and firm innovation strategies: Theory and evidence from China |
| title_full | Risk expectation from trade protectionism and firm innovation strategies: Theory and evidence from China |
| title_fullStr | Risk expectation from trade protectionism and firm innovation strategies: Theory and evidence from China |
| title_full_unstemmed | Risk expectation from trade protectionism and firm innovation strategies: Theory and evidence from China |
| title_short | Risk expectation from trade protectionism and firm innovation strategies: Theory and evidence from China |
| title_sort | risk expectation from trade protectionism and firm innovation strategies theory and evidence from china |
| topic | D21 F13 L19 |
| url | http://www.sciencedirect.com/science/article/pii/S2444569X24000209 |
| work_keys_str_mv | AT zeyangli riskexpectationfromtradeprotectionismandfirminnovationstrategiestheoryandevidencefromchina AT feifeifang riskexpectationfromtradeprotectionismandfirminnovationstrategiestheoryandevidencefromchina |