patent premiumPatent premium in weak IPR countries 291213

PatentPremiuminCountrieswithWeakIntellectualPropertyRightsProtection,Motivation,Increasingpatentingactivitiesinemergingeconomies(withweakIPRprotection)PatentingactivitieshavesurgedinChinainthelasttenyearsWeakIPRprotectionandpossiblylowpatentpremiuminChina,Motivation,Firmsthatpatentedinnovationsareexpectedtoearnalmost50%moreonaveragethaniftheyhadnotpatentedthoseinnovations(Aroraetal.,2008,IntJIndOrgan)ThisvalueincrementisdefinedaspatentpremiumLittlelarge-scalequantitativeresearchonpatentpremiumduetotechnicaldifficultiesEvenlesspatentpremiumresearchhasafocusonemergingeconomieswithweakIPRprotection,Researchquestions,IstherepatentpremiumfordomesticfirmsandMNCsinChina(weakIPRprotection)?HowdoesindustrycompetitionmoderatetheextentofpatentpremiumfordomesticfirmsandMNCsinChina?,Theories,CompetitiveadvantageandresourcebasedviewAfirmcanachievesuperiorperformanceandbuildupitscompetitiveadvantagethroughitsresourcesRivalfirmscanerodeafocalfirmscompetitiveadvantageiftheypossesssimilarresourcesthatposethreattothefocalfirmSustainabilityofthefocalfirmscompetitiveadvantagewillthereforebedeterminedbywhetherrivalfirmsareabletoimitatesuchkeyresourcesandwhetherthefocalfirmcancreatebarrierstosuchimitationSoafocalfirmsresourcesneedtomeetcertainconditionsforthefirmtoachievesustainablecompetitiveadvantage,Cornerstonesofcompetitiveadvantage(peteraf,1993),Hypothesesdevelopment,ResourceheterogeneityMNCsingeneralhavesuperiortechnologicalcapabilitythanlocalfirmsinemergingeconomiesMNCsingeneraldemonstrateforeignnessEx-postlimittocompetitionIsolatingmechanismsneededforMNCstolimitrivalsimitationtotheirsuperiortechnologiesPatentisanisolatingmechanism,soissupposedtobringpatentpremiumIncountrieswithstrongIPRprotection,companieswithsuperiortechnologymaygainhigherpatentpremiumIncountrieswithweakIPRprotection,companieswithsuperiortechnologymaygainlittlepatentpremiumPatentmaynotbeeffectiveinpreventingimitationPatentpremiummaybefurthercompromisedbylowercausalambiguityduetopatentpolicyH1andH2Ex-antelimittocompetitionCompetitiveadvantageduetosuperiortechnologieswouldbeweakerwithweakex-antelimittocompetitionIsolatingmechanismisevenmoreimportantwithweakex-antelimittocompetition,particularlyforcompanieswithoutsuperiortechnologyH3andH4,Hypotheses,H1:MultinationalCorporations(MNCs)incountrieswithweakIPRprotectionobtainsinsignificantpatentpremium.H2:LocalfirmsincountrieswithweakIPRprotectionobtainspositivepatentpremium.H3:ThepatentpremiumofMNCsincountrieswithweakIPRprotectionincreaseswiththeintensityofcompetition.H4:ThepatentpremiumoflocalfirmsincountrieswithweakIPRprotectionincreaseswiththeintensityofcompetition.H5:ThepatentpremiumoflocalfirmsishigherthanthepatentpremiumofMNCsincountrieswithweakIPRprotection.(tobetested)H6:IntensityofcompetitionstimulateshigherpatentpremiumforlocalfirmsthanforMNCsincountrieswithweakIPRprotection.(tobetested),AnnualSurveyofIndustrialEnterprises,NationalBureauofStatisticsofChinaCoverage:1999-2007;allstate-ownedfirmsandnon-state-ownedfirmswithmorethanRMBfivemillioninrevenueE.g.146,251and336,732manufacturingfirmsinthedatasetfortheyears1999and2007,respectively50firm-levelstatisticalindicators,includinginput,output,R947patentingfirms(677domesticand270foreign);2297non-patentingfirms(1,401domesticand896foreign),Dataset,CalculationofTFPOlleyandPakes(1996,Econometrica)sestimatorLevinsohnandPetrin(2003,RevEconStud)sestimatorasrobustnesscheckEstimationofPatentpremiumAmatchingestimatorfollowedbydifference-in-differenceestimationfirmsize(li,-1),ownershipstatus(statei,-1,collectivei,-1,privatei,-1,HKMTi,-1andforeigni,-1),yearandfour-digitindustrydummies,11,Empiricalstrategy,CalculatetheHerfindahlindexforeachofthe24four-digitindustrieseveryyearAveragetheindexforeachindustryRanktheaverages,12,Empiricalstrategy,13,Results:Generaldomesticandforeignfirms,14,Domesticandforeignfacingstrongandweakcompetition,Note:1.Wedonotreportthematchingresultswhentheoverlap(commonsupport)assumptionisnotsatisfied.,ThereispatentpremiumfordomesticfirmsintheChineseprecisioninstrumentandofficemachineryindustryintheperiodof1999-2007.ThepatentpremiumlastedtillthesixthyearafteradomesticfirmfiledthefirstpatentThereisnosignificantpatentpremiumforMNCsintheChineseprecisioninstrum