Previous research has explored the impact of returnee CEOs on firms’ R&D strategies, yet little is known about how these CEOs make strategic decisions amidst growing geopolitical tension in emerging economies. To address this gap, we explore the impact of geopolitical tension on firms’ R&D investment and the moderating role of returnee CEOs. Drawing on the stakeholder view of upper echelons, we argue that returnee CEOs attenuate the positive effect of geopolitical tension on firms’ R&D investment due to their stakeholder concerns and tendency to make more conservative decisions to protect their positions. We employ a Difference-in-Differences (DD) research design by leveraging the US.-China trade war started in 2018 as a natural experiment. Our analyses of Chinese firms between 2008 and 2023 reveal that firms led by returnee CEOs reduce their R&D investment following the escalation of geopolitical tension amidst the US.-China trade war. These findings provide valuable insights into how stakeholder considerations influence returnee CEOs’ strategic risk-taking decisions and subsequently shape firm strategies in emerging economies.
