Litigation,Culture Norm And Corporate Innovation

Corporate innovation has been recognized as an important long-term investment for enterprises,which not only helps them cultivate core competitiveness but also provides a fundation for the long-term stable growth of firm's performance.With regards to innovation,there are two vital problems.One is how to ensure that the enterprise can obtain enough economic benefits through innovation and shape a virtuous cycle of R&D input-profit increases-expand R&D.It requires a well-established formal system to limit the usage of new knowledge and protect such benefits.The other is that how to spur the innovation.In view of these two problems,this paper investigate the impact of patent litigation at the legal system level,as well as the gambling culture and cooperation culture in cultural customs and their effects on corporate innovation activities.This thesis consists of six chapters.The main contents of each chapter are organized as follows:The first chapter is the introduction.This part mainly introduces the background of the problem,the logic of the research and the contribution to the present research.The second chapter is the literature review.First,this chapter reviews the relevant literature on enterprise innovation;secondly,it sorts out the related research in the field of law and finance and the field of litigation risk.Finally,it summarizes achievements of academic research in the field of culture.The third chapter examines the relationship between patent litigation and corporate innovation.We try to reveal how prosecutions and its judgments influence innovation activities of plaintiff enterprises and defendants.In addition,as the patent lawsuit takes a long time,this chapter also investigate the impact of the length of litigation on innovation.The fourth chapter mainly focus on the relationship between regional gambling culture and innovation.We proxy the gambling culture with four indicators.They are per capita lottery expenditure among adult population,the number of vistors travalling to Macao percentage with the total population,the number of direct flights to Macao scaled with total population and the number of Mahjong scaled with total population.With these four indicator,we study how gambling culture influence R&D and total patent applications.The fifth chapter tries to investigate the impact of collaboration culture and innovation.We collect two different texts.One is the official website of the listed company illustrating the corporate culture.The other is the management discussion and analysis(MDA)in the annual report.We build two collaboration index by employing textual analysis and investigate the impact of collaboration culture on innovation outpot and innovation efficiency.The sixth chapter is the summary of the full text,including conclusions,limitations of the research and future directions.The conclusions of this paper are as follows:First,the charge of patent litigation will enhance innovation for both sides of lawsuits.Furthermore,when dividing plaintiff firms into industry leads and industry followers,we find patent litigation will spur industry leaders' innovation while impede industry followers' innovate activities.Industry leaders do not change their R&D investments regardless of winning or losing.However,industry followers and defendant firms will significantly increase or decrease R&D investments according to the judgments of lawsuits.Trial lengths do not affect defendant firms' innovation,but they will stifle plaintiff firms' innovate activities.This negative effect is particularly significant for industry followers.The findings are robust to sys-GMM estimation.Second,higher gambling culture leads to higher R&D input and output,which measures by R&D intensity and invention patent.This positive effect is more pronounced in the samples of private enterprises,lower Islamic faith areas,and managers' shareholding.We find that the gambling culture promotes the corporate innovation by improving the risk preference of the managers.In order to solve the endogeneity problem,we use the average sown area per capita in 1978 as an instrument variable and adopt the two stage least squares(2SLS)regression to overcome the potential omitted variables of the model.Third,we find that collaboration culture plays an important role in innovation.This positive effect is more pronounced in competitive industries and regions with higher interpersonal trust and industry clusters.In terms of influencing channels,collaboration culture can promote innovation by improving the cohesion of employees and promoting the cooperation between firms and academic institutions.In order to overcome the endogeneity,we employ two different methodologies.In one hand,we use the rice planting area per capita as an instrument variable so as to control potential omitted variable.On the other hand,we exploit abnormal turnover of the chairman as exogenous shocks and adopt PSM-DID to test the causal relationship between cooperation culture and innovation.The results show that our conclusion is still robust.The contribution of this paper to the present research is summarized in the following three perspectives:First,it enrich the literature of law and finance.Since the initiation of law and finance from LLSV(1998),the relevant research mainly focuses on the legislative level(LLSV,2000a;LLSV,2000b;Brockman and Chung,2003;Himmelberg et al.,2004;Klapper,2004),but existing literature neglects the role of legislative enforcement guaranteeing the contractual enforcement.We know that effective law enforcement can promote the development of the financial market and enhance enterprise's investment efficiency.In terms of innovation,existing research mainly examines the impact of intellectual property rights protection on enterprise innovation activities(Chen and Puttitanun,2005;Yin et al.,2013;Shi and Gu,2013)from the perspective of legislative studies.But in China,although the legislation of intellectual property rights has been perfect(Wu,2011),the current situation of intellectual property protection is still not optimistic.The inefficiency of law enforcement reflects many problems in legal system such as the unreasonable way of proofing,the long trial time and so on.Existing literature has made some achievements towards to the research about corporate innovation,but few pay attention to that how the uncertainty of intellectual property rights induced from litigation and its judicial determination influences the motivation of innovation.Based on a unique perspective,the third chapter shed light on whether patent litigation will exert a completely different influence on the R&D investment with regards to the plaintiff and defendant for the first time.This will further reveal the mechanism of patent litigation on innovation activities and provide theoretical foundation and empirical support for conducting judicial reform.Second,we construct a new measurement of firms' micro-level culture by employing textual analysis for the first time.At present,the research on culture mainly focuses on the macro-level,such as national culture,religious belief and so on.Few could conduct firm-level research on culture norms.This is mainly because corporate culture has been short of universal indicators.In order to solve the problem,the fifth chapter of this thesis collects non-financial listed companies in Shanghai and Shenzhen with all the contents of culture-related information in the website and MDA in the annual report.We construct two different proxy variables based on keyword textual analysis and deep learning analysis,which could measure the collaboration culture.Our research provides a feasible methodology for other firm-level culture research.Third,we expand the field of culture and finance basing on the background of China.Culture and finance is the frontier academic research areas.However,as the connotation of culture is very broad,it is still difficult to define.Therefore,it has been a long time for culture to absent of mainstream economic analysis framework.But culture,as the precipitation of all customs and habits in the historical development of this area,represents the common value orientation of all individuals in the area in receiving information and dealing with information.Furithermore,cultural differences will directly lead to the differences in behavior and thus affect economic activity.China owns a long and continuous history.Meanwhile,the mountains and rivers are vast and the cultural differences between North and South are huge.This richness and diversity provide a natural experimental scenario for cultural research.The fourth and fifth chapters of this thesis focus on the influence of the gambling culture and the collaboration culture on the corporate innovation activities.It will further reveal the mechanism of firms' collaboration culture on innovation activities,enhance the extent of firms' attention to cultural capital,and provide theoretical foundation and empirical evidence to formulate policies and strategies for building a strong socialist cultural country.