The Power of Title: Intellectual Property Support and Firm Innovation

52 Pages Posted: 16 Apr 2020 Last revised: 7 Apr 2021

See all articles by Maobin Xu

Maobin Xu

Central University of Finance and Economics (CUFE) - School of Finance

Kai Wu

Central University of Finance and Economics (CUFE) - School of Finance

Date Written: April 7, 2021

Abstract

It is widely argued whether the government should intervene in firms’ innovation activities and support firm innovation. We explore a recognition policy that honors cities with a title in intellectual property (IP) utilization, management, and protection under governments’ effort. The difference-in-difference regression with a matched sample indicates that the recognition of IP model cities increases firm innovation output and productivity. Different firms are funded by local governments and utilize financial support in different ways. High-tech firms receive many government subsidies, whereas non-high-tech ones receive substantial support in tax returns. High-tech firms invest in a huge amount of R&D expenditures, whereas non-high-tech firms benefit from a relaxed financial burden for increased loans. Therefore, the recognition effectively mobilizes local governments’ enthusiasm to participate in firm innovation through the inducement of political achievement and makes government funding support for firms’ innovation activities more efficient to win that title through this recognition.

Keywords: intellectual property, government support, firm innovation

JEL Classification: O31, O34, O38

Suggested Citation

Xu, Maobin and Wu, Kai, The Power of Title: Intellectual Property Support and Firm Innovation (April 7, 2021). Available at SSRN: https://ssrn.com/abstract=3559108 or http://dx.doi.org/10.2139/ssrn.3559108

Maobin Xu

Central University of Finance and Economics (CUFE) - School of Finance ( email )

Beijing
China

Kai Wu (Contact Author)

Central University of Finance and Economics (CUFE) - School of Finance ( email )

Beijing
China

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