Cross-Regional Patenting: A Signal of Enhancement for Innovation Competence or Market Entry?

Abstract

Patenting at home country or foreign countries affects firm performance. Treating cross-regional patenting as a signal of innovation enhancement and a signal for multi-market competition, we investigate the impact of cross-regional patenting on a firm’s overall performance and performance in a specific foreign market (the US). To meet the research purposes, this research collected a wide range of primary and secondary data of 164 Taiwan’s manufacturing firms in the information and communication technology (ICT) sector. The findings suggest that if a firm has domestic and overseas patenting simultaneously (i.e., in Taiwan and the US), this cross-regional patenting can increase a firm’s overall market performance but decrease its US market performance. This result implies that though cross-regional patenting may send a signal of multi-market competition in one overseas market, it also sends another signal of greater innovation competence to global vendors, which leads to a better overall market performance. This research also enriches current multi-market competition research by introducing the competition in factor markets.