Abstract:     In the era of digitalization, Chinese firms urgently need to adopt open innovation models to improve their internal innovation capabilities and achieve innovation catch-up. However, enterprises will face the famous "paradox of openness" dilemma in open innovation. Using a panel dataset of joint patent applications of Shanghai and Shenzhen A-share listed companies from 2006-2022, this paper empirically tested the effect and mechanism of social trust on enterprises′ open innovation. The results showed that: (1) social trust can effectively promote firms′ open innovation. This conclusion remains robust after employing the instrumental variable method, the difference-in-differences approach, and a series of robust analyses; (2) social trust inhibits opportunistic behavior of enterprises and promotes open innovation through moral constraint, information disclosure, and reputation mechanisms; (3) the impact of social trust on open innovation is pronounced for high-tech intensity firms, large-sized firms, multinational firms, and firms operating within highly dynamic environments; and (4) social trust and intellectual property rights protection system can jointly generate positive interactive effects on open innovation activities of enterprises, presenting a synergistic mechanism. This paper has opened up the black box of relational governance in the "paradox of openness" dilemma, and it will provide some important empirical evidence for China′s in-depth implementation of the social credit system construction project and the cultivation of an open innovation environment with global competitiveness.

Key words:  social trust, intellectual property rights protection, paradox of openness, heterogeneity effect