Josh Lerner, Harvard Business School, studies  the effect of intellectual property rights (IPR) protection, ownership type, and their joint impact on innovation in China. Within China, local IPR protection is positively related to firms R&D investments and innovation. Private firms invest more in R&D and innovate more than state-owned enterprises (SOEs), and this effect is notably stronger with high IPR protection standards. Our results support theoretical arguments that IPR protection strengthens firms' incentives to innovate, and that private firms are more sensitive to IPR protection than SOEs. These findings point to the importance of stronger institutions for China's sustained growth and development.