Using trademarks to fend off import competition: Evidence from the top R&D-spending companies

Abstract

This study focuses on the use of trademarks (TMs) in response to import competition from China. As intangibles increasingly become a source of competitive advantage in international markets, firms, especially multinational enterprises (MNEs) based in developed countries, need to leverage their unique resources against increased price-based competition from low-wage countries. We argue that TMs are market-based intangible resources used by highly innovative MNEs to signal superior quality and to differentiate themselves in industries that are more exposed to imports. We test our hypotheses using a panel of the world’s most innovative companies that combine financial information and trademarking activities in the years 2009–2014. We find evidence that Chinese competition increases the likelihood that MNEs based in industrialised countries file TM applications and incorporate both services and goods into their product portfolios, in line with the servitisation of manufacturing firms.