patent premium我的资源Patent premium_CH_Lanhua 20180713

How Much Ownership, Institutions and Competition Matter on Patent Premiums in Weak Property Rights Protection MarketsAbstractThe weak intellectual property rights (IPR) protection in emerging markets pose a critical challenge for firms attempting to appropriate returns from innovation. In this study, we investigate whether and when firms in emerging markets obtain patent premium, defined as improved productivity with patenting activities in comparing with the productivity without such parents. Drawing on complementary theoretical insights from institutional logic and liability of foreignness, we predict and analyze how firm ownership, institutional development, and competition intensity affect patent premium. Our empirical analysis of a ten-year period of 32,901 firms in Chinas high-tech industries wherein foreign firms are actively competing answered a puzzle: Firms do obtain patent premiums despite the weak IPR protection in the country. The level of patent premium, however, is significantly lower for foreign firms than for domestic firms, particularly in institutional weak regions within the country. We also find that parent premium increases我们的结果表6和原稿H4不支持，表明应该是decreases。不确信这个假说通不过，还能像陆老师现在这么写吗？可能要和路老师讨论下。 as institutional development improves, but decreases as industry competition intensifies. Patent premium growth due to improved institutional development is even stronger for foreign firms than for domestic firms, whereas patent premium diminution due to heightened competition is stronger for domestic firms than for foreign firms. These suggest that foreign firms, comparing with local firms, are more prone to institutional improvement but less susceptible to industry competition concerning reaping rewards from patents and innovation. We did not find liabilities of privateness in this case no significant difference between state-owned and privately-owned domestic businesses regarding the effect of institutions and competition on patent premium.对于liability of foreighness和liability of privateness的测量的定义我们还需要明确。是指外资企业和内资企业的专利溢价在制度改进和竞争加强的变化中发生同方向变化？还是指外资和内资企业专利溢价变化的幅度之间进行比较？ Keywords: Patent premium, IPR, innovation, institutions, emerging economyINTRODUCTIONIt has been a big paradoxical question to both scholars and executives alike for some time: Can innovation and patents pay off for firms competing in large emerging markets where market opportunities are enormous yet intellectual property rights (IPR) protection is rather limited? The last decade has witnessed a surge of innovation activities in emerging markets (! INVALID CITATION ! (Zhao, 2006, Thursby and Thursby, 2006). However, the weak IPR protection there pose a critical challenge for firms attempting to appropriate returns from patenting activities. The appropriation literature asserts that patenting may not be viable in countries where law enforcement for IPR is weak (Al-Aali and Teece, 2013) because the effectiveness of patenting primarily depends on the quality of national law system and institutional environment in which firms operate (Schankerman, 1998; Somaya, 2012). In such cases, innovators must count on other appropriation mechanisms, such as secrecy, control of intertwined assets, or taking an advantage of lead time (“first to market”) to capture value from innovations (Al-Aali and Teece, 2013). Nevertheless, patent applications in emerging markets have been growing steadily in recent decades (! INVALID CITATION ! (Keupp et al., 2012; Li, 2012). Patent statistics reveals that the number of invention patent applications received by the State Intellectual Property Office of China (SIPO), for instance, increased from 63,000 in 2001 to 1.3 million in 2016, producing a staggering 21-fold growth. Domestic and foreign applications for invention patents in the nation have both been growing at an annual average rate of 21% in the period of 1986-2015 (! INVALID CITATION ! (Hu and Jefferson, 2009; Hu, 2010), with the fact that China surpassed the US since 2011 becoming the worlds biggest country in receiving patent applications.This phenomenon is striking considering the weak institutional environment and IPR protection in these economies, which presumably leads to weak incentives to patent (Hu and Jefferson, 2009). The paradox has prompted researchers to investigate the conditions that are motivating the rapid growth of patenting in these countries (! INVALID CITATION ! (Hu and Jefferson, 2009; Hu, 2010; Keupp et al., 2012; Li, 2012). It has been recognized that market size and economic advancement may offset some disincentives of patenting activities caused by weak IPR protection (xxxx我自己的论文，Huang, Can; Jacob, Jojo, 2014. Determinants of Quadic Patenting: Market Access, Imitative Threat, Competition and Strength of Intellectual Property Rights. Technological Forecasting and Social Change, 85, p4-16. ). Or, governmental support (e.g., better financial and policy treatment) for innovation may foster firm-level patenting activities despite the existence of patent infringement (xxxl Xibao, Li. (2012). Behind the recent surge of Chinese patenting: An institutional view. Research Policy, 41(1), 236-249. l Huang, Can, 2017. Recent Development of the Intellectual Property Rights System in China and Challenges Ahead, Management and Organization Review, 13, 1, p39-48.l Liu Cheng, Menita; Huang, Can, 2016. Transforming Chinas IP System to Stimulate Innovation, In: Lewin, Arie Y.; Murmann, Johann Peter; Kenney, Martin (Eds.) Chinas Innovation Challenge, Overcoming the Middle Income Trap, Cambridge University Press, p152-188.). Others also suggest that improved physical infrastructure and geographic clusters for innovation are conduits of patenting undertaking (xxx). Despite these great efforts, nevertheless, it remains unanswered whether and when patents are valuable for firms in large emerging markets characterized with weak IPR protection. Combining insights from institutional logic and liability of foreignness, we aim to understand how much patenting is valuable for firms in such an important context. We denote the value of patents by patent premium, which generally refers to increased returns produced by the patents above the value without such patents (Arora et al., 2008)Arora, 2008, R&D and the Patent Premium;Arora, 2008, R&D and the Patent PremiumArora, 2008, R&D and the Patent Premium;Jensen, 2011, Estimating the patent premium: Evidence from the Australian Inventor Survey, and specifically in this study connotes to increased productivity with a firms patents relative to productivity without such patents (check). We propose that institutional development, competition intensity and firm ownership (foreign vs. domestic; state-owned vs. privately-owned) independently and interdependently affect the firms patent premium, and in particular, the effect of institutional development and competition intensity on patent premium is conditional upon firm ownership due to liabilities of foreignness (relative to domestic firms) and of privateness (relative to state-owned). The ideal method to estimate the patent premium is to compare the value of a patented invention with and without the patent (Gambardella, 2013), but the value of an invention is hard to observe in both patenting and non-patenting scenarios (check). In order to provide robust evidence, we tackle this challenge by quantifying patent premium by comparing productivity gains and using a large dataset of high-technology companies competing in China, the largest emerging market that features well with market opportunities, weak IPR protection, institutional change, and intensified competition in most sectors.Our longitudinal analysis of a ten-year period of 32,901 firms in Chinas high-tech industries (in which foreign firms are actively operate) through our compiling and matching the data from Chinas National Bureau of Statistics Annual Survey of Industrial Enterprises with the patent data from SIPO (Chinas Intellectual Property Rights Office?) offers some very interesting and important insights. One, we find a significantly positive patent premium in China. Two, this positive premium is not equally distributed across firms of different ownership types. Domestic firms obtained higher patent premium than foreign firms, thus validating the existence of liability of foreignness in this regard. But we find no liabilities of privateness, that is, patent premium obtained by domestic privately-owned firms is actually higher than domestic state-owned firms when the quality of institutions is low in local regions where the firm operates. Three, patent premium decreases when industrial competition increases根据Table 8，在t到t+2年，私营企业的专利溢价比国有企业高，但是在t+3和t+4年，私营企业的专利溢价比国有企业低。对于liability of privateness的测量结果的定义，我们需要进一步明确。, but the magnitude of this effect is greater for domestic firms than for foreign firms and is greater for state-owned firms than for privately-owned firms.These results, detailed later, provide both theoretical and practical insights. It, for instance, reminds that while liability of foreignness does exist regarding patent premium, or innovation gains in more general, foreign firms can benefit from their core capabilities in alleviating such liabilities such that patent premium can grow more for foreign than for local firms in regions (geographically) where institutional environments are better developed. Or, patent premium will decrease less for foreign firms than for local cohorts in sectors (industrially) where competition intensity is higher. This study also exhibits strong evidence on institutional complexity in general and institutional incompatibility in particular, suggesting that subnational variance in institutional conditions exerts an important impact on patenting activities and rewards. An understanding of institutional logic is fuller if we unite the institutional void logic (weak IPR protection) and the institutional complexity logic (institutional fragility and incompatibility across different locations with a country) in analyzing both foreign and local firms. While we agree with prior studies suggesting that state-owned firms possess some advantages in dealing with institutional forces (e.g., xxxx), this is not the case with regard to patent premium state-owned firms have no advantages over privately-owned peers in patent premium in a legally IPR-weak country and in an institutional under-developed location within this country. While competition can create more value to societal well-being in emerging markets (xxx), it does squeeze patent premium, more so for domestic firms than for foreign counterparts.THEORETICAL DEVELOPMENTPatenting under Weak IPR Protection: Theoretic LogicPatenting has long been recognized as a differentiating mechanism, providing owners with the right to exclude others from using the invention for a limited period (Mansfield, 1986; Ziedonis, 2004). The exclusionary power of patent rights can bring market power (Bessen, 2009) and allow firms to pursue additional profit opportunities and competitive advantage (Somaya, 2012; Gambardella, 2013). A firm holding patent rights can exercise market power by raising the prices it charges for its own products or services above the level at which they would charge in a competitive market. Parent holders can also bolster market power through enforcement of patent rights, which entails the use or threatened use of litigation to stop infringers from using patented inventions. These holders can further develop a carefully crafted portfolio of related patents to impede imitation, deter competition, and defend against patent infringement (! INVALID CITATION ! (Reitzig, 2004; Whittington et al., 2009; Fisher Iii and Oberholzer-Gee, 2013). Firms can additionally appropriate parent returns through licensing or selling patent rights. These transactions can be beneficial or even bring strategic advantage for the patent owners (Somaya, 2012; Fisher Iii and Oberholzer-Gee, 2013). Finally, firms can enhance the value of their patent rights through standard setting and technological collaboration. When a firms patents are included in a technology standard, these patents are more likely to be demanded and licensed (Joshi and Nerkar, 2011). Moreover, the inclusion of patents in standards-based patent pools can increase subsequent innovations that build on them (Rysman and Simcoe, 2008), which may propel the patented technologies toward becoming a dominant design in the industry (Teece, 1986).While the above logic generally applies to firms in every country, actual returns or benefits of patenting activities will significantly vary depending on institutional and market environments. Perhaps, there is no country that brings in such complexity and paradox for firms to deal with parenting activities as larger emerging economies like China and India. Markets are huge yet IPR protection remains weak. Albeit some of these governments have been making efforts in protecting patent rights, especially after joining the World Trade Organization, or WTO (UNCTAD?), legal enforcement of IPR protection is impeded by a plentitude of perilous issues such as public empathy of copycatting (xxx), weak judiciary and administrative systems (especially local levels) in IPR (xxx), business and public sector corruption (xxx), and political and institutional instability (xxx). Such institutional voids or hardships relating to patenting activities are further pronounced by lack of institutional transparency and limited and often selective enforcement of IPR law (Ostergard, 2000, Oxley, 1999; Khanna and Palepu, 2013). This makes it difficult to appropriate returns from innovation through patent protection (Teece, 1986, Al-Aali and Teece, 2013, Schankerman, 1998). We approach this paradox from the institutional logic, complemented with the liability of foreignness logic (allowing us to contrast foreign and local firms) and the liability of privateness logic (allowing us to compare privately-owned firms with state-owned). The institutional logic we develop originates from works that integrate institutional theory (e.g., DiMaggio and Powell, 1983; Scott, 1987) and strategic choice that hinges in part on a firms dependence on external institutions that control critical resources (e.g., Oliver, 1991; Peng, 2003; Tolbert, 1985). This institution-based view of strategy, and Olivers strategic response logic to institutional processes in particular (1991; 1997), holds that institutional forces enact a strong effect on organizations, even more so during institutional change (Peng, 2003; xxx) but this effect is not equal to every organization in the said institutional setting due to three idiosyncrasies - one in varying dependence on external institutions that maintain power stemming from resource control (Pfeffer and Salancik, 1978), second in varying strategic intent to exploit opportunities during institutional change (Child? Hitt?), and third in varying policy treatments or capabilities in dealing with institutional dynamics (Hillman? Rose Luo?) (we can have a footnote here, noting that we did not separately study capabilities as the issue has been rigorously examined by prior studies). Grounding on such logic, we argue that institutional hazards, such as weak IPR protection, may hinder patenting activities but competitive opportunities and values through patenting in a large emerging economy characterized with vast market demand can be adequate enough to offset this hindering effect. This will be particularly true when firms are located in a more institutionally developed region (i.e., weaker institutional effect) within a large market, or when opportunities in the sector in which the firm competes are more abundant (i.e., lower industrial competition). (After writing the above, I wonder if we have data on (a) relationship capability and (b) dependence on institutions (which can be measured by a foreign firms sales on China in total global sales我们有所有企业的出口额数据。兰花做一个新的表格。把外资企业分成两组，一组是出口额/总销售额高比例，一组是低比例的。然后看一下专利溢价的变化。因为这个表格隶属于哪个假设目前还不清楚，我们会单独汇报这个表格。, or every firms sales to Chinas government or state sector in total sales这个数据是没有的。; these two variables can bring us closer to my above theoretic premise; Also do you have data that can show premium changes in relation to Chinas improvement of national level institutions or IPR protection scores over the 10-year period?中国全国的平均知识产权保护指数数据我们可以通过樊纲的市场化指数生成，其他的数据源也存在。但是我们觉得用樊纲的省份数据生成全国的数据比较好，数据源统一。我们想可以把10年分成前后两个阶段。正好我们汇报的是t到t+4，5年的时间。那正好可以把十年分为1998-2002低组和2004-2007分成高组。我们会单独汇报这个表格。 Currently we only reported subnational, and one would naturally wonder how premium changes in relation to national-level years changes in IPR, which are reported by several international economic organizations)The above premise can be further delineated complementarily by liabilities of foreignness logic (Zaheer, etc) and of privateness logic (Zhou, et al., ASQ, etc.). Per the former, we expect that foreign firms parenting rewards will be lower than local firms due to liability of foreignness, which is, in this case, manifested in extra difficulties, challenges and costs in responding to weak IPR protection. Per the latter, we anticipate that state-owned domestic firms will be advantageous over privately-owned domestic firms in patenting gains that are subject to the suppressing effect of weak IPR safeguard. This is because state-owned firms are institutionally protected by the government (xxx), receiving more governmentally controlled resources, preferred policy support, and other regulatory privileges (xxx; xxxx Luo, SMJ). This suggests that among different ownership types, foreign and privately-owned domestic firms如前文所述，对于这一假说的结果不是很强。 are deemed to benefit less from patenting gains in weak IPR protection markets than local firms and state-owned firms, respectively. This prediction can b