Band together or go it alone? Climate risk and corporate collaborative innovation

Corporations are under increasing pressure to adapt their strategies to mitigate the adverse effects of climate risk. This study explores the theoretical and empirical relationship between climate risk and corporate collaborative innovation, highlighting the mechanisms involved. Theoretical analysis suggests that climate risk, by intensifying stranded assets and cross-risks, acts as a compensatory driver for collaborative innovation among corporations. Digital transformation strengthens this compensatory mechanism, while corporate risk-taking diminishes its impact. Empirical analysis using data from Chinese A-share listed companies supports the theoretical framework, revealing that climate risk compels companies to “band together” for technological advancement to manage external challenges. The mediating effect of digital transformation enhances the flow of innovation elements among firms, bolstering collaborative innovation, whereas risk-taking weakens this effect. This paper deepens the understanding of how climate risk shapes corporate strategy. It provides practical insights for corporate strategists seeking collaborative responses to environmental volatility and supports policymakers in designing sustainability-oriented policies.