Rule of Law Enhancement, Innovation Incentives, and Business Performance: Evidence from China’s IPCs

Wang Hao (), Liu Chengkui (), Yu Yue () and Lin Xiaodan ()
Additional contact information
Wang Hao: Wuhan University
Liu Chengkui: Wuhan University
Yu Yue: Wuhan University
Lin Xiaodan: Wuhan University

Journal of the Knowledge Economy, 2025, vol. 16, issue 2, No 50, 7350-7382

Abstract: Abstract This study aims to determine the relationship between judicial protection of intellectual property rights (IPRs), innovation, and firm performance. Using the establishment of intellectual property courts (IPCs) by the Chinese government in Beijing, Shanghai, and Guangzhou in 2014 as a quasi-natural experiment, we build a difference in differences model to assess the impact of legal regulation on firm performance from a judicial perspective. The results show that the IPC reform significantly promotes the growth of firm performance, and this incentive effect is realized through the innovation quality mechanism. For different enterprises, the effect of IPC policy is more evident among firms with strong external funding dependence, large enterprise size, large spillover effects, and state ownership. In addition, we calculated sustainability indicators for firms and found that IPCs increased firms’ total factor productivity through quality-based innovation mechanisms. The important contribution of this study is that it fills a research gap in examining the impact of legal regulation on firms from a judicial perspective by identifying the relationship between judicial protection of IPRs, innovation, and business performance. This paper has implications for the promotion of judicial reform in countries with weak IPR systems, for developing countries like China, the judicial protection of IPRs should be increased to provide an institutional environment more conducive to enterprise development.

Keywords: Intellectual property; Judicial protection; Innovation-driven; Business performance (search for similar items in EconPapers)
JEL-codes: K40 L25 O31 O34 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s13132-024-02195-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jknowl:v:16:y:2025:i:2:d:10.1007_s13132-024-02195-2

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/13132

DOI: 10.1007/s13132-024-02195-2

Access Statistics for this article

Journal of the Knowledge Economy is currently edited by Elias G. Carayannis

More articles in Journal of the Knowledge Economy from Springer, Portland International Center for Management of Engineering and Technology (PICMET)
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().