Economic Policy Uncertainty,Internal Control And Enterprise Innovation

Economic policy uncertainty refers to the uncertainty caused by the inability of economic entities including companies to effectively predict future policy changes.Often,economic policy uncertainty will increase the risk of the company's business activities and have a certain negative impact on the growth of the enterprise.Internal control is under a certain environment,enterprises in order to improve the efficiency of the operation and fully and effectively access and use a variety of resources.Internal control is also the organization,plan,procedure and method of all kinds of restriction and adjustment carried out within the unit in order to achieve the established management objectives.It is an important part of corporate governance.Existing results shows that economic policy uncertainty of enterprise innovation behavior and the influence of investment behavior is the opposite,most of the literature on economic policy uncertainty of the enterprise investment have no objection,but for the enterprise's innovation activities,according to schumpeter's innovation theory,endogenous growth theory,real option theory and irreversible investment theory and principal-agent theory,the current academic circles have two opposite views-the promotion and suppression.Some scholars believe that economic policy uncertainty will inhibit enterprise innovation,which is the joint effect of inhibiting enterprise investment,because these scholars believe that innovation is a special form of investment.In the uncertain period of economic policy,the "cautious effect" and the "delayed effect" will also restrain the innovation activities of enterprises.Some scholars believe that economic policy uncertainty will promote enterprise innovation.The possible reason is that during the period of economic policy uncertainty,enterprises transfer the funds originally used for investment into their innovation and research and development.In terms of transmission mechanism,existing literature shows that economic policy uncertainty will affect the investment behavior of enterprises through the financing they obtain,while the innovationactivities of enterprises will be affected by external conditions such as government subsidies and financial constraints.All the above influencing factors are the external environment factors in the operation of an enterprise.Then how will the economic policy uncertainty,which is also the external macroeconomic environment factor,influence the innovation of an enterprise? In the period of high uncertainty of economic policies,will the innovation behavior of enterprises be affected by the regulatory effect produced by internal control? This paper discusses it.Based on the financial data of Shanghai and Shenzhen A-share listed companies from 2013 to 2018,China's economic policy uncertainty Index and the internal control index of listed companies published by Shenzhen Dubo Company,this paper studies the impact of economic policy uncertainty on enterprises' innovation activities,and attempts to explore the moderating effect of enterprises' internal control in this process.In this paper,the fixed effect model is used to regression the obtained data.The empirical results show that economic policy uncertainty will have a positive incentive effect on the innovation behavior of enterprises,and high-quality internal control can have a positive regulatory effect in the process of economic policy uncertainty promoting the innovation of enterprises.In the further test,this paper finds that economic policy uncertainty will have a selection effect on enterprises with different internal control quality when it affects their innovation activities,that is,with the increase of economic policy uncertainty,it will be more inclined to encourage enterprises with better internal control quality to carry out innovation activities.As the internal control itself will also promote the innovation activities of enterprises,according to the previous definition of the moderator variable,it can be determined that the internal control in the process of economic policy uncertainty to promote enterprise innovation is a semi-moderator variable.Based on the business problems found in the study,the Suggestions are as follows :(1)enterprises can choose to carry out innovation activities in the period of high uncertainty of economic policies to obtain future profits,so as to make up for their losses in the current period;(2)In the period of economic policy uncertainty,enterprises can reduce the losses suffered in the period of high economic policy uncertainty by strengthening their owninternal construction quality;(3)Whether the innovation investment should be carried out in this period should be judged according to the business status of the enterprise itself,and the decision should be made after weighing the advantages and disadvantages to avoid greater losses after the innovation investment.Finally,the final conclusions of this paper are as follows :(1)the increase of economic policy uncertainty will promote enterprises to increase investment in innovation and R&D;(2)In the period of high uncertainty of economic policies,the internal control of enterprises will have a positive regulatory effect on the innovation behavior of enterprises;(3)Economic policy uncertainty has a selection effect on enterprises with different internal control quality.It will select enterprises with higher internal control quality and stimulate their innovation investment.