Today’s baton and tomorrow’s vision: The effect of strengthening patent examination system on corporate innovation strategies

Abstract

This study examines the role of strengthened patent examination system in shaping firms’ innovation activities. We find that strengthening patent examination system discourages the strategic use of patents and stimulates efforts toward substantive innovation that develops novel technologies. We identify two boundary conditions, namely technology intensity and ownership type, which regulate the impact of the strengthened patent examination system on firms’ innovation strategies. We further reveal that the post-reform changes in corporate innovation strategies lead to an improvement in the overall quality of innovation output, which results in improved firm financial performance. This study contributes to the research on the impact of patent system changes on innovation, and also the research on firm patenting trends by linking to standards of patent examination. Our findings provide valuable insights for policymakers and scholars in patent policy reforms.