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<p>This study examines the impact of perceived environmental uncertainty on corporate performance, questioning the moderating role of investments in research and development. To test the empirical conjecture, we implement regression analysis on a sample of nonfinancial Greek firms. Our findings show that environmental uncertainty significantly hinders firm performance, in line with the view that uncertainty exacerbates information asymmetry. However, we find that the association between uncertainty and performance is contingent on innovation investment, suggesting that R&amp;D spending provides firms with dynamic capabilities to navigate economic downturns. The moderating effect is more pronounced for larger firms. While acknowledging the short-term negative effects, our analyses indicate that R&amp;D investments’ benefits capitalize as improved profitability over longer time horizons. The results are robust to alternative specifications, endogeneity, and sensitivity tests. The findings imply that managers should consider investing in R&amp;D to offset the negative impacts of increased environmental volatility. Policymakers should consider whether to provide subsidies or other forms of supporting corporate R&amp;D activities. This study provides a new perspective on the contingent role of R&amp;D in the relationship between uncertainty and business outcomes, offering insights for strategic decision-making in turbulent environments.</p>

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Environmental uncertainty and corporate performance: Can R&D investments provide a silver lining to this cloud?

  • 期刊论文

  • 发表日期：

    2025年8月7日

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  • Efstathios Magerakis,
  • Christina Theodoraki

摘要

This study examines the impact of perceived environmental uncertainty on corporate performance, questioning the moderating role of investments in research and development. To test the empirical conjecture, we implement regression analysis on a sample of nonfinancial Greek firms. Our findings show that environmental uncertainty significantly hinders firm performance, in line with the view that uncertainty exacerbates information asymmetry. However, we find that the association between uncertainty and performance is contingent on innovation investment, suggesting that R&D spending provides firms with dynamic capabilities to navigate economic downturns. The moderating effect is more pronounced for larger firms. While acknowledging the short-term negative effects, our analyses indicate that R&D investments’ benefits capitalize as improved profitability over longer time horizons. The results are robust to alternative specifications, endogeneity, and sensitivity tests. The findings imply that managers should consider investing in R&D to offset the negative impacts of increased environmental volatility. Policymakers should consider whether to provide subsidies or other forms of supporting corporate R&D activities. This study provides a new perspective on the contingent role of R&D in the relationship between uncertainty and business outcomes, offering insights for strategic decision-making in turbulent environments.