The Power of Title: Intellectual Property Support and Firm Innovation
52 Pages Posted: 16 Apr 2020 Last revised: 7 Apr 2021
Date Written: April 7, 2021
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: Suggested Citation