Win by defence: The impact of defensive trademarks on corporate innovation

Abstract

Using a sample of listed Chinese companies from 2012 to 2020, we investigate the impact of registration of defensive trademarks on corporate innovation. We find that firms with a higher number of defensive trademarks engage in less innovation. The mechanism tests show that defensive trademarks reduce innovation by increasing firm market share, and further tests show that the negative effect is more pronounced for firms with resource constraints and state‐owned enterprises. Our findings indicate a substitutive effect of defensive trademarks on corporate innovation, which is a win‐by‐defence strategy adopted by firms in market share competition.