Patent insurance and innovation trajectory: evidence from patent insurance pilot cities in China

ABSTRACTPatent insurance protects innovation and appropriability by reducing patent litigation costs. However, whether patent insurance promotes incremental or breakthrough innovation has not been solved. Taking China’s patent insurance pilot cities as a quasi-natural experiment, we evaluate how patent insurance influences innovation trajectory using firm-level data from 2008 to 2017. The results show that being located in patent insurance pilot cities promotes incremental innovation. The patent insurance subsidy of the local government positively moderates the effect of patent insurance on incremental innovation. Heterogeneity results show that patent insurance strongly promotes incremental innovation for state-owned enterprises and enterprises with litigation experience. The results are robust and provide policy implications for China’s patent insurance.KEYWORDS: Patent insuranceinnovation trajectoryincremental innovationbreakthrough innovation Disclosure statementNo potential conflict of interest was reported by the author(s).Correction StatementThis article has been corrected with minor changes. These changes do not impact the academic content of the article.Additional informationFundingThis work was supported by the Youth Program of the National Natural Science Foundation of China [grant number 72204036].Notes on contributorsQiaoshuang MengQiaoshuang Meng is an assistant professor in the School of Economics and Management, at Dalian University of Technology, Dalian, China. Her research interests include intellectual property management, innovation policy, innovation networks and technology M&As.Leyi LiLeyi Li is a master’s degree candidate majoring in industrial economics in the School of Economics and Management, at Dalian University of Technology, Dalian, China. Her research interests include innovation economics.