This study examines how enhancing professionalism in the enforcement of intellectual property rights (IPR) protection shapes firms’ innovation strategies. Exploiting the staggered rollouts of specialised intellectual property (IP) courts in China since 2014, multiperiod difference-in-differences analyses are used to demonstrate that the establishment of IP courts has significantly increased investment in both exploratory and exploitative innovation, with a stronger effect on exploratory innovation. The establishment of IP courts also exerts a positive spillover effect on firms beyond their local confines, particularly in terms of exploratory innovation. Moreover, the positive impact of exploratory innovation is more pronounced for firms located in inland (vs. coastal) provinces and those possessing a stronger knowledge base. This study not only enriches the knowledge on both the antecedents of ambidextrous innovation and the implications of judicial IPR enforcement but also provides empirical evidence supporting the establishment of IP courts as an effective place-based policy to boost local firms’ innovation incentives.
