Intellectual Property Rights Protection, Ownership, and Innovation: Evidence from China

Using a difference-in-differences approach, we study how intellectual property right (IPR) protection affects innovation in China in the years around the privatizations of state-owned enterprises (SOEs). Innovation increases after SOE privatizations, and this increase is larger in cities with strong...

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Bibliographic Details
Published in:The Review of financial studies 2017-07, Vol.30 (7), p.2446-2477
Main Authors: Fang, Lily H., Lerner, Josh, Wu, Chaopeng
Format: Article
Language:English
Subjects:
Incentives
Innovations
Intellectual property
Ownership
Private sector
Privatization
Property rights
Public enterprise
Studies
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Summary:Using a difference-in-differences approach, we study how intellectual property right (IPR) protection affects innovation in China in the years around the privatizations of state-owned enterprises (SOEs). Innovation increases after SOE privatizations, and this increase is larger in cities with strong IPR protection. Our results support theoretical arguments that IPR protection strengthens firms' incentives to innovate and that private sector firms are more sensitive to IPR protection than SOEs.
ISSN:0893-9454
1465-7368
DOI:10.1093/rfs/hhx023