When is research and development more effective in times of crisis? The role of environmental policies

Abstract

PurposeIn times of crisis, innovation management and specifically Research and Development (R&D) investments are critical to temper company losses and stimulate higher revenues. Environmental policies, for their potential to stimulate environmental innovations and efficient management of resources, may hold a magnifying role in this relationship. By relying on the distinction between regulatory policies and institutional incentives, this paper argues about the moderating role of environmental policies between a firm's R&D expenses and its performance.Design/methodology/approachHypotheses are tested on data collected from a sample of small and medium-sized Chinese enterprises after the 2008 financial crisis.FindingsFindings reveal positive moderating effects of both regulatory pressures and institutional incentives, with a more significant effect of government support. The highest impact is reached when both these types of policies are present.Originality/valueThe theoretical and methodological relevance of this distinction, the importance of an appropriate mix of environmental policies in policymaking and their resilience building role in stimulating environmental innovations in the aftermath of crises are discussed.