We study the link between firms’ technological domain specialization and the timing of their decisions to withdraw a patent application. A timely decision to withdraw a patent application is crucial for firm innovation, but bias in assessing the value of invention in a patent application can prolong this decision making. Building on the literature about competency trap, we argue that decision makers tend to favor inventions within a specific technological domain and hold biased mental representations of the value of those inventions, causing a significant delay in their patent withdrawal decisions. In addition, successful innovation experience and low industry competition make it difficult for decision makers to escape the competency trap and withdraw patent applications with low value in their specialized technological domains. The hypotheses are tested using a sample of patents filed by listed Chinese manufacturing companies during 1999-2010, with their patent withdrawal status being tracked until 2020. Our findings enrich the literature on technological domain specialization and patent withdrawal decisions.
