Green innovation under ambiguity and risk

This study examines how ambiguity and risk shape green innovation across countries with different institutional environments. Using 163,391 firm-year observations from 35 economies during 1997–2021, we find that risk is positively associated with green innovation among G7 firms, whereas ambiguity shows no statistically significant association on average. Among non-G7 firms, ambiguity is positively associated with green innovation, while risk is negatively associated with it. These associations vary across countries. Our findings suggest that uncertainty may help explain the relationship between institutional environments and green innovation, with implications for policymakers and investors navigating the green transition.