Research-driven or party-promoted? Factors affecting patent applications of private small and medium-sized enterprises in China’s Pearl River Delta

In China, as elsewhere, the number of a firm’s patent applications is regularly considered to be an indicator of its innovation capability. China’s patent system, however, is peculiar in that government subsidies and official targets play a notable role in influencing individuals’ patenting behaviour. Using company survey data, this paper examines the influence of firms’ formal ties with the Communist Party of China (CPC) on their patenting behaviour. Taking the example of private small and medium-sized firms in the electronics industry of the Pearl River Delta, it establishes that the presence of CPC offices can be the strongest single predictor for patenting even when other factors are taken into account. This seems particularly noteworthy because earlier studies found that small and medium-sized firms in the Pearl River Delta were less susceptible to central government influence than other Chinese firms.