Navigating institutional complexity: How firms respond to conflicting patenting demands from competing institutional logics

Abstract

Despite previous research recognizing effective strategies for navigating institutional complexity, limited attention has been directed to understanding the coexistence of multiple goals prescribed by competing institutional logics. This study aims to fill this gap by examining why and how organizations adopt a specific selective coupling strategy to reconcile diverse goals dictated by conflicting institutional logics. We investigate this strategic response in the context of firm patenting in China during the 2000s, which offers an ideal setting given its remarkable economic transformation and the influence of government guidelines on firm patenting behavior. Drawing on and extending the literature on institutional complexity and innovation management, we argue that firms with a balanced state and private legal-person ownership experience heightened tension regarding patent quantity and quality, stemming from the historically dominant state logic and the emerging market logic, leading them to generate a larger quantity of lower-quality patents. The empirical findings, using data from publicly listed Chinese firms, support the predictions formulated based on our theoretical framework. This study contributes to the literature on firms' patenting behavior and enhances the understanding of organizational responses to institutional complexity.