The role of registering trademarks on firms' innovation: Evidence from Chinese firms

Abstract Firms are used to registering trademarks for intellectual property protection which ultimately increases their innovations. Using a novel data set tracking firm‐level trademark registrations of Chinese listed firms between 2005 and 2017, this article sheds light on the role of a firm's first trademark in its patents and the related provision's implication in the developing world. We implement a difference‐in‐difference model to find approximately a 30% increase in the number of a firm's patents after its first trademark application. Moreover, we take advantage of the latest amendment of China's Trademark Law in 2013 as an exogenous shock to investigate the influence of law protection on trademark‐induced innovations. The results suggest a strengthened effect of first trademark applications on patent numbers after the 2013 amendment.