RESEARCH SUMMARY: Although patent races of leading technology firms have garnered significant attention in the prior literature, it remains unclear how the outcome of a patent race affects subsequent firm-level innovation. Drawing on agency theory, we propose that losing a patent race drives firms to pursue more technological innovation than winning due to managerial concerns. To investigate the mechanism, we hypothesize that the positive impact of a lost race on a firm’s innovation is more pronounced when more shareholders hold near-term investment horizons and when a CEO is less protected against the pressure of shareholders. By constructing a unique dataset of simultaneous patent applications, we find evidence consistent with the proposed theory.  

• Finalist, 2021 SMS Annual Conference Best Paper Prize

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