Financing Constraints and Sticky Behavior of R&D Expenses: The Moderating Role of Green Innovation Strategy

This study examines how financial constraints affect the sticky behavior of Research and Development (R&D) expenditures, with particular emphasis on the moderating role of green innovation. While maintaining R&D investment during sales declines is critical for sustainable innovation, the convex nature of R&D investment and its dependence on internal funding often cause constrained firms to exhibit reduced stickiness, or anti-stickiness. Using large-sample empirical evidence, we confirm a significant negative relationship between financial constraints and R&D cost stickiness. Crucially, we demonstrate that green innovation strategies mitigate this effect by alleviating financing frictions through enhanced investor confidence, which incentivizes managers to retain idle R&D resources. Robustness tests that extending to Selling, General and Administrative Expenses (SG&A) validate this dual mechanism. These findings highlight green innovation’s strategic value as a resilience lever, advancing environmental goals while strengthening firms’ financial flexibility in the face of resource constraints.