Ownership and Innovation Strategy: Evidence from the Patent Citation Network

Abstract

This paper examines firms’ innovation strategies under different ownership, based on the patent citation network. Different from prior studies posit that non-state-owned firms are more likely to be innovative, we find that the innovation strategy of Chinese state-owned firms performs more disruptively than those non-state-owned firms, especially in markets where there exists a huge technological gap among firms. The mechanisms can be attributed to the risk compensation effect and the competition protection effect. We contribute to expanding the literature on how ownership affects firm’s innovation behavior.

Keywords: ownership, Innovation Strategy, Patent Citation Network