The power of innovation diffusion: How patent transfer affects urban innovation quality

The complexity and sustainability of technology are both important standards to measure innovation quality. As the diffusion of innovation is generated outside the region, patent transfer may have a promoting or crowding-out effect on urban innovation quality. We analyzed the spatial distribution characteristics of China’s urban patent transfer network. This empirical study, considering the heterogeneity of cities and patents, found that patent introduction in developed cities will promote substantive innovation measured by the proportion of invention patent. Additionally, the patent outward transfer has a crowding-out effect on the sustainable innovation of underdeveloped cities. Further analysis shows that when the institutional threshold of intellectual property protection is exceeded, the promotion of patent introduction and outward transfer in developed cities to local substantive innovation will be significantly enhanced. Conversely, in underdeveloped cities, the impact of patent outward transfer on substantive and sustainable innovation will change from promoting effect to crowding-out effect, that is, it induces the market failure of local technological innovation.