Firm export, trade war, and R&D investment of family firm

The motivation of this paper is to explore the impact of the Sino-US trade war on the R&D investment of Chinese exporting family firms (FFs). Applying a difference in difference (DID) methodology, we are able to compare FFs who have export business with FFs who have not export business, and compare FFs that have export business before and after the Sino-US trade war. We find that family firm export significantly promotes R&D investment in an emerging market context, but the Sino-US trade war negatively affects the R&D investment effect of exports. This means that the trade war has indeed reduced R&D investment by Chinese FFs. Moreover, the relationship between trade war and export R&D investment effect is governed by family ownership, institutional ownership, and government subsidy. This paper contributes to our understanding of the important role of trade war in technological innovation strategy of FFs.