Beschreibung:
How do de-globalization events affect corporate innovation decisions? By exploiting tariff variations during the U.S.–China trade war as a quasi-natural experiment, we find that the escalation of U.S. tariffs is associated with a relative increase in corporate expenditure on research and development by listed Chinese manufacturing companies. Through a novel approach that infers the degree of competitive pressure from textual analyses of company annual reports, we identify an induced competition mechanism and provide evidence that aligns with escape-competition motives. The marginal treatment effect is more pronounced for firms initially in neck-to-neck competition industries. This is among the pioneering studies to examine the impact of adverse foreign trade shocks on innovation responses in the source country, thus contributing with scholarly and policy implications in a period of de-globalization