Strategizing Intellectual Property Rights for Enhanced Innovation: the Moderating Effects of R&D and FDI in China’s Regional Context

This study investigates the strategic role of intellectual property rights (IPR) in driving technological innovation in China, focusing on the impact of research and development (R&D) and foreign direct investment (FDI) in different regional contexts. Given the critical importance of understanding how enhanced IPR protection can stimulate technological progress in emerging economies like China, this research addresses theoretical and practical gaps by proposing a region-specific approach to IPR strategy, considering the unique dynamics of R&D and FDI. Analyzing data from 21 Chinese provinces, cities, and autonomous regions from 2007 to 2019 using a fixed-effects model, the findings highlight that stronger IPR protection significantly boosts domestic technological innovation by motivating R&D efforts, which in turn increases the rate of invention patent applications. However, the study uncovers a complex interaction where increased IPR stringency might deter FDI flows, negatively impacting the IPR-innovation relationship. Furthermore, the interplay between FDI and R&D can hinder innovation outcomes, with the Western region of China being particularly affected by FDI's influence on innovation, in contrast to the Eastern and Central regions. These insights emphasize the necessity of aligning IPR protection with R&D and FDI policies to create an innovation ecosystem conducive to sustained technological development. This research contributes to the existing literature by offering empirical evidence on the optimal configuration of IPR, R&D, and FDI strategies for fostering innovation, providing valuable insights for policymakers and stakeholders in the knowledge economy.