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Patent Openness Decisions and Investment Propensities of Frontier Enterprises in Asymmetric Competition

  • Chen Liu
  • , Daiqing Yan
  • , Zihao Song
  • , Gandang Shi
  • , Wentao Zhan
  • , Minghui Jiang*
  • *Corresponding author for this work
  • School of Management, Harbin Institute of Technology
  • Shanghai University of Finance and Economics
  • Singapore University of Social Sciences

Research output: Contribution to journalArticlepeer-review

Abstract

The patent openness decisions of frontier enterprises and the consequent investment tendencies of laggard enterprises play a significant role in their profitability. Despite the benefits resulting from directly using open patents, in order to capture market share and surpass frontier enterprises, laggard enterprises must decide whether they are going to invest in R&D or expansion. In this context, based on evolutionary game theory and the operational behaviors of both frontier and laggard enterprises, this study constructed a model of enterprise revenue under asymmetric competition, exploring the impact of patent openness with and without government subsidies on enterprise revenue. This study discovered that: (1) when the industry scale is small, frontier enterprises gain significant social effects through patent openness, while laggard enterprises invest in expansion; (2) as the industry scale gradually expands, frontier enterprises tend to prefer not to open their patents, and laggard enterprises gradually shift from imitation to independent innovation when the return on R&D investment increases more than that on expansion investment; and (3) when the R&D costs of laggard enterprises are high, frontier enterprises usually choose not to open their patents, forcing laggard enterprises to turn to investment in expansion. This allows frontier enterprises to reduce the losses from patent openness while enjoying the benefits of reduced industry production costs. This study provides new perspectives on patent openness and investment tendencies with the help of an evolutionary game mechanism and offers managerial policy recommendations.

Original languageEnglish
Article number146
JournalSystems
Volume13
Issue number3
DOIs
StatePublished - Mar 2025
Externally publishedYes

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

  1. SDG 9 - Industry, Innovation, and Infrastructure
    SDG 9 Industry, Innovation, and Infrastructure

Keywords

  • asymmetric competition
  • evolutionary game theory
  • investment expansion
  • patent openness

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