patent premium我的资源Full Draft 20180107

Patent Premium in China: The Moderating Role of Institutions and OwnershipAbstractThe weak intellectual property rights (IPR) protection in emerging economies poses a critical challenge for firms in terms ofto appropriatinge returns from their innovations. In this study, we investigate whether and when the firms in emerging economies, in particular in China, can obtain patent premium, which is defined as the incremental returns produced byfrom theirfirms patent in addition to the value of the unpatented invention, which we refer to as patent premium. Drawing on institution-based view in the context of international business, we hypothesize on how firm ownership and institutional development collectively affect patent premium. We findEmpirical analysis demonstrate that high-tech firms in China obtained patent premium despite of the weak IPR protection in the country. The magnitude of the patent premium varies between foreign and domestic firms, and between state-owned and privately-owned firms. We also find that institutional development shapes patent premium and has disparate effects on patent premium across firm ownership types. In addition, institutional development influences a firms patent premium, and firm ownership, whether a firm is foreign or domestic and whether it is state-owned or privately-owned, moderates the effects of institutional development on the patent premium. Keywords: Patent premium, intellectual property rights, innovation, institutional development, ownership1. IntroductionThe last decade has witnessed a surge of innovation activities in emerging economies (Qu et al., 2013, Zhao, 2006, Thursby and Thursby, 2006). However, the weak intellectual property rights (IPR) protection in emerging economies poses a critical challenge for firms to appropriate returns from the innovations (Nandkumar and Srikanth, 2015). 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 depend on quality of the national laws and institutional environment in which firms operate (Schankerman, 1998, Somaya, 2012). In such cases, innovators must count on other appropriation mechanisms, such as secrecy, the ownership of complementary assets or the advantage of lead time (“first to market”) to capture value from innovations (Al-Aali and Teece, 2013). Nevertheless, patent applications in emerging economies, most notably in China, have been growing steadily in the recent decades (Li, 2012, Keupp et al., 2012). Patent statistics reveals that the number of invention patent applications received by the State Intellectual Property Office of China (SIPO) 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 have both been growing at an annual average rate of 21% in the period of 1986-2015 (Hu and Jefferson, 2009, Hu, 2010). China surpassed the US in 2011 to become the country receiving the most invention patent applications in the world.This phenomenon is striking considering the weak institutional environment and IPR protection in China (Zhao, 2006, Li, 2012), which presumably lead 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 China (Li, 2012, Hu and Jefferson, 2009, Hu, 2010, Keupp et al., 2012). These studies point to two main conclusions: first, that a number of forces have contributed to the patent surge in China, but foreign and domestic firms patenting decisions are driven by disparate factors, and second, that despite the divergent motivations to patent, foreign and domestic firms both consider institutional environment (legal development such as patent law amendments and government intervention such as government subsidy) one an important environmental factor, namely, the institutional environment (legal development such as patent law amendments and government intervention such as government subsidy). Despite the fruitful literature on why firms patent in China, the questions of whether and when patents are valuable for firms in an emerging economy with weak IPR protection have received less attention.Combining insight gained from the extant literature of patenting surge in China with institution-based view in the context of international business, Tthis study proposes a conceptual framework to aims at understanding whether and when how patenting can be valuable for firms in Chinaan emerging economy. We calculate denote the value of patents by patent premium to measure the value of patents, which refers to the incremental returns produced by the patents in addition to the value of the unpatented inventions (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. Combining insight gained from the extant literature of patenting surge in China with institution-based view in the context of international business, wWe hypothesize propose that institutional development and firm ownership, whether it is foreign or domestic and whether it is state-owned or privately-owned, and the degree of institutional development jointly collectively affect a firms patent premium, and firm ownership moderates the effects of institutional development on the firms patent premium.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 this counterfactual is hard to observe. In this paper, we adopt a bias-corrected matching approach using a large dataset, which is compiled by matching the data from the Chinese National Bureau of Statistics Annual Survey of Industrial Enterprises with the patent data from SIPO. Besides firm-level patenting information, the data include key firm-level financial information such as sales, capital investment, and employment, as well as demographic information such as the founding year and ownership details. A nearest-neighbor matching estimator is used to find counterfactual firms (i.e., firms that did not start patenting in the observational period) which are closest to the firms that started patenting in the observational period, and then to compare their performance. Thus if there is significant difference between the performance of the two types of firms, it would be due to patenting. This difference is the key to our empirical identification of the patent premium.This study makes several contributions. It is the first to empirically estimate the patent premium in an emerging economy where IPR protection is weak. The results imply We find a significantly positive patent premium in China. However, that the benefit of patenting in China may not be equally beneficial fordistributed across firms of different ownership types. Domestic firms in China, in particular state-owned enterprises (SOE)privately-owned firms, benefit more from patentingobtain higher patent premium than foreign firms. This implication finding diverges from extant literature (in the setting of a developed economy), which demonstrate that foreign-owned patents are typically more valuable than patents owned by domestic firms (Pakes et al., 1989, Lanjouw, 1992, Putnam, 1996) There is mixed evidence in (Schankerman, 1998). We find differential impact of institutional development on the patent premium of firms of different ownership types in China. Domestic firms, in particular privately-owned firms, achieve significantly positive patent premium regardless of the quality of institutions and the magnitude of their patent premium is higher when the quality of institutions is low. In contrast, foreign firms patent premium is statistically insignificant when the quality of institutions is low and turns positive only when the quality of institutions is high. From a theoretical standpoint, this study advances our understanding of appropriation strategy by extending the literature to an emerging economy context. Conventional wisdom about appropriation in emerging economies is that patenting is inadequate and alternative mechanisms should be adopted. Accordingly there is a rich literature that sheds light on firms appropriation strategy in an emerging economy. Contrary to the conventional wisdom, our findings imply that patenting can be a valid appropriation mechanism and patents can be quite valuable, even in an emerging economy.The remainder of the paper is organized as follows. Section 2 provides a theoretical model ofreviews the means of generating patent premium generation. Section 3 reviews existentdraws on institution theory in the context of international business literature and develops hypotheses. Section 4 describes the data sources and empirical strategies. Section 5 shows the empirical analyses and results. Section 6 concludes with a discussion of the implications of our findings for management practice.2. A Theoretical BackgroundModel: Means of Patent Premium Generation There is a variety of means of extracting value from patent right (Al-Aali and Teece, 2013, Shapiro and Varian, 1998, Arora and Ceccagnoli, 2006, Fisher Iii and Oberholzer-Gee, 2013, Hsu and Ziedonis, 2013)Hsu, 2013, Resources as dual sources of advantage: Implications for valuing entrepreneurialfirm patents;Fisher Iii, 2013, Strategic Management of Intellectual Property: An Integrated ApproachFisher Iii, 2013, Strategic Management of Intellectual Property: An Integrated Approach;Hsu, 2013, Resources as dual sources of advantage: Implications for valuing entrepreneurialfirm patents. In theory, patents are property rights of potentially revenue-generating inventions (Stuart et al., 1999). Patenting has long been recognized in management research as an isolating mechanism, which raises barriers to imitation of a firms technological assets (Mahoney and Pandian, 1992) and provides the owners (inventors or their “assignees”) the right to exclude others from using the invention for a limited period (Ziedonis, 2004, Mansfield, 1986). The exclusionary power of patent rights provide a degree of market power either in product markets or in markets for technology (Bessen, 2009) and allow firms to pursue additional profit opportunities and competitive advantage (Somaya, 2012, Gambardella, 2013). A firm holding patent rights can exercise the 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, thereby increasing profitability (Fisher Iii and Oberholzer-Gee, 2013). Another approach to exercise market power is through the enforcement of patent rights, which entails the use or threatened use of litigation to stop infringers from using patented inventions or collect royalties from the companies using the patented technologies (Somaya, 2012). Exercising market power is by no means the only option available. Going beyond the scope of a single patent, firms can also develop a carefully crafted portfolio of related patents to impede imitation, deter competition, and defend against patent infringement suits (Whittington et al., 2009, Reitzig, 2004, Fisher Iii and Oberholzer-Gee, 2013)., which may become effective tools for firm strategy (Spencer, 2003, Al-Aali and Teece, 2013). Some firms practice the so-called defensive patenting, through which they seek to build large portfolio of patents in a particular area to impede imitation, deter competition, and defend against patent infringement suits (Whittington et al., 2009, Reitzig, 2004, Fisher Iii and Oberholzer-Gee, 2013). In many contexts, a large patent portfolio is also used as a bargaining chip in cross-licensing negotiations (Reitzig, 2004), in which each party in the cross-licensing settlement receives a license to use the others technology to make its own products (Al-Aali and Teece, 2013).An additional means of patent premium generation is licensing or selling the patent rights. Firms can benefit from these transactions if the patented technologies are more valuable when used or in the hands of the new owner (Fisher Iii and Oberholzer-Gee, 2013). For instance, other firms may be more efficient than the patent owner to utilize the patented technologies, or have resources and capabilities that the patent owner lacks to exploit the technologies fully (e.g., the manufacturing or marketing capacities) (Hall and Ziedonis, 2001). There is a wide variety of ways in which tThese transactions can be beneficial or even bring strategic advantage for the patent owner (Somaya, 2012, Fisher Iii and Oberholzer-Gee, 2013). For instance, Llicensing the patent rights can discourage imitation and reduce rivals incentives to challenge the validity of the patent rights (Fisher Iii and Oberholzer-Gee, 2013). Carefully calibrated licensing or selling the patent rights might help the patent owner to increase capacity, augment the demand for its products, and or shape competition (Fisher Iii and Oberholzer-Gee, 2013). A firm can further enhance the value of its patent rights through technological collaboration. A salient example of using patents in collaboration is standard setting, in which a firm negotiate with competitors for creating a technology standard in its favor if it owns key enabling patents for the standard (Shapiro and Varian, 1998). The potential benefits of these strategies are large. For instance, wWhen a firms patents are included in a technology standard, these patents are more likely to be widely licensed and commercialized (Joshi and Nerkar, 2011). This is particularly attractive for small firms that lack complementary commercialization assets (Simcoe et al., 2009). Moreover, the inclusion of patents in standards-based patent pools has the effect of increasingcan increase subsequent innovation that builds on them (Rysman and Simcoe, 2008), which may propel the patented technologies toward becoming a dominant design in the industry (Somaya, 2012). When a product is designed and manufactured following the dominant design and common technology standards, the value of the product to consumers often sharply increase (by catalyzing network externalities, reducing information costs, and so forth) (Fisher Iii and Oberholzer-Gee, 2013), which in turn facilitate the firm to profit from the patented technologies (Teece, 1986) These Signaling在后面没有用到，而且和前几种方式很不同，所以我从图中去掉了。means of patent premium generation inform how patents enhance the appropriation of returns from firm innovation and ultimately affect firm value and performance. Although appropriating returns from innovation is a primary instrument of patent premium generation, another mechanism of patent premium generation isfirms can also obtain patent premium through signaling. Patents can signal the depth of a firms underlying technological capabilities (Hsu and Ziedonis, 2013, Gambardella, 2013). Firms with many patents are likely to have high-quality scientific and engineering staffs, therefore better chances to create future technological advances and capitalize on external scientific developments (Stuart et al., 1999, Henderson and Cockburn, 1994). The value of patents as quality signals can be especially salient for new venture because it is generally difficult to get information about the quality of these startups (Hsu and Ziedonis, 2013). Patents help new ventures access external financing (Mann and Sager, 2007) and boost their IPO (initial public offering) valuation (Heeley et al., 2007). Besides technological capabilities, patents can also signal an organizations political and regulatory savvy (Whittington et al., 2009) as patent is the outcome of a complex process involving innovating firms, lawyers, and patent examiners (Myers, 1995). Overall patent-owning firms can earn patent premium through various means of appropriating returns from innovation and through the signaling role of patents我删除了in securing financing。因为secure finance 只是signal的一个用途，还有通过signal来寻找合作伙伴等其他用途。. The various approaches of patent premium generation are summarized in Figure 1. No one of these activities is optimal under all circumstances though (Fisher Iii and Oberholzer-Gee, 2013). and fFirms can effectively increase the appropriability and the signaling effect afforded by firms their patents via undertaking these activities in a concerted and coordinated manner can (Somaya, 2012). -Insert Figure 1 about here-3. Hypothesis DevelopmentThe extant literature on patent premium primarily consider patents an appropriation mechanism (Jensen et al., 2011, Arora et al., 2008). A small streamofpatent premium researchcenters on the signaling effect of patents (Hsu and Ziedonis, 2013). It is generally found that patents can be valuable for firms and sometimes the size of patent premium can be substantial (Jensen et al., 2011, Bessen, 2009, Schankerman, 1998). there has been a remarkable surge of patenting activities in emerging economies in the last decade, most notably in China (Li, 2012, Keupp et al., 2012), little is known about whether patenting is valuable in an emerging economy.Despite the considerable advances in our understanding of the patent premium, theoretical analysis and empirical evidence unanimously focus on the setting of a developed economy including Germany, France, Australia, Finland, the UK, and the US (Schankerman, 1998, Lanjouw, 1998, Bessen, 2009, Jensen et al., 2011, Hall et al., 2005, Grnqvist, 2009). Although there has been a remarkable surge of patenting activities in emerging economies in the last decade, most notably in China (Li, 2012