How does intellectual property protection matter? Infringement disputes and corporate innovation investment persistence

ABSTRACT

This study explores how corporate innovation investment persistence is when confronted with intellectual property (IP) infringement disputes and the possible role of the external institutional environment (changes in regional IP protection). We document that when a firm is confronted with IP disputes, its innovation investment persistence produces ‘reversal’ changes regarding the infringed firm and the infringer. The innovation investment persistence of the infringed firm is significantly impaired. By contrast, the persistence of the infringer is considerably enhanced. However, with the increasing IP protection in the region, the degree of decline in the infringed’s investment persistence can be significantly positively mitigated, while that of the infringer is significantly negatively adjusted. Our conclusion provides insights into learning enterprises’ innovation decisions.

KEYWORDS:

• Innovation investment persistence
• intellectual property protection
• infringement disputes
• judicial status

JEL CLASSIFICATION:

• O32
• D81
• G31

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ See Zhou Yongnan, et al. ‘One step at a time is always a matter of concern – the chronicle of General Secretary Xi Jinping’s inspection in Zhejiang’. Zhejiang Daily, May 2015. https://zjnews.zjol.com.cn/system/2015/05/30/020675694.shtml

² Available in ‘China Intellectual Property Development Status Evaluation Report (2014–2019)’ by the Intellectual Property Development Research Center of the State Intellectual Property Office, http://www.cnipa-ipdrc.org.cn/.

³ See ‘China Intellectual Property Index Report’ China Financial and Economic Press, 2011–2019, respectively.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [72172009]; Beijing’s ‘High-grade, Precision and Advanced Discipline Construction (Municipal)-Business Administration’ project [19008022213]; Beijing Municipal Education Commission Social Science General Project [SM201910011006]; Chinese Fund for the Humanities and Social Sciences [18CJY028 and 22ZDA044]; Outstanding Young Talents of the Support Program for the Construction of Teachers in Beijing [BPHR202203053]; China Scholarship Council (CSC) State Scholarship Fund [No. 202311180001].