Weathering the storm: how does firm oil price uncertainty exposure impact green innovation in times of geopolitical tensions
Kai Huang  1, 2, 3, 4@  
1 : Kai Huang
Hokowhitu -  New Zealand
2 : Jing Chi
3 : Jing Liao
4 : Mui Kuen Yuen

This study examines the impact of oil price uncertainty (OPU) sensitivity on corporate green innovation, in times of geopolitical tensions. Using manually collected import and export data at the destination country-firm level from China Customs Dataset, we construct the unique measure of firm-level geopolitical tensions of Chinese listed companies received from foreign supply chain partners. Our results reveal that firms with higher exposure to OPU are more likely to engage in green innovation. Importantly, geopolitical tensions significantly and positively moderate the relationship between corporate OPU exposure and green innovation efforts, with the effect being particularly pronounced in the context of geopolitical tensions originating from supplier countries. Further analysis reveals that domestic supply chain alliances and supply chain efficiency mitigate firms' urgency for green innovation. Finally, we find that the effects of OPU and geopolitical tensions on green innovation are more pronounced in firms with higher international exposure, lower government subsidies, and greater competitive pressures.


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