Document Type

Thesis - Open Access

Award Date


Degree Name

Master of Science (MS)

Department / School


First Advisor

Nacasius Ujah


Firm Political Risk, R&D, Real Option, Strategic Growth Theory, Uncertainty


I examine how firms make R&D investment decisions during periods of political uncertainty. To minimize stickiness and overly generalized assumptions, I employ quarterly data. I find that firms invest more in R&D when facing high levels of political risk. The results suggest that this positive relationship between political risk and R&D investment is more pronounced for competitive and politically sensitive firms. Additionally, the positive association is evident among firms with higher growth opportunities and more liquid assets. The results are robust to the test for correlation, addressing endogeneity, and alternative proxies adopted for the variables of interest. Overall, the findings of this study support the strategic growth option theory, which suggests that firms follow a preemptive strategy during periods of high uncertainty.


South Dakota State University

Included in

Finance Commons



Rights Statement

In Copyright