Navigating Geopolitical Risk: Internal Reconfiguration, Innovation-led Quality Productivity, and Firm Competitiveness
Dan Luo, Yiran Wang, Yong Chen
Keywords:
Geopolitical risk, Innovation-led quality productivity, Digitalization
Abstract:
This study examines how geopolitical risk affects firms’ innovation-led quality productivity (IQP) and how digital transformation moderates this relationship. It focuses on how firms adjust their productivity structures under external uncertainty shocks. Using monthly panel data on digital economy firms in the Yangtze River Delta, the study reports three main findings. First, geopolitical shocks exert a significant lagged negative impact on firms’ IQP. These external shocks do not immediately suppress innovation activities themselves; instead, they weaken innovation-led productivity by constraining market demand and the commercialization of innovative outputs. Second, in response to heightened geopolitical uncertainty, firms tend to strengthen internal restructuring, such as reallocating resources and increasing innovation investment. This creates a short-term defensive innovation response. Third, digital transformation provides only limited and heterogeneous buffering effects, which are insufficient to systematically offset the adverse impact of geopolitical risk on IQP. Building on the dynamic chain of “geopolitical risk → internal restructuring → innovation-led quality productivity → corporate competitiveness,” this study elucidates how external shocks reshape the transformation from innovation to productivity and, ultimately, to competitiveness through firms’ internal adjustment mechanisms.
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 Navigating Geopolitical Risk: Internal Reconfiguration, Innovation-led Quality Productivity, and Firm Competitiveness [PDF file] [Filesize: 945.64 KB]
 10.7441/joc.2026.02.01
Luo, D., Wang, Y., & Chen, Y. (2026). Navigating Geopolitical Risk: Internal Reconfiguration, Innovation-led Quality Productivity, and Firm Competitiveness. Journal of Competitiveness 18(2), 1–37. https://doi.org/10.7441/joc.2026.02.01
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