How Courts Act as Institutional Actors in Governance: Strategic Adjudication in Embedded Courts

Abstract “Embedded courts” explains how Chinese courts operate within the system of local bureaucratic organisation, raising concerns about how judges balance adjudicative functions with the expectations of local governance. Using 47,641 first-instance trademark judgments (2014–2021), we empirically examine adjudication in embedded courts and observe the following phenomenon: non-local plaintiffs are more likely to win but receive lower compensation; corporate defendants win more often yet face higher damages when they lose. Regional heterogeneity indicates that some courts exhibit lower support rates for local plaintiffs and well-known trademark holders. These findings reveal the strategic logic underlying local bureaucratic organisation. We develop a Judicial Behavior Index (JBI) and analyse Henan Province. The results suggest courts act as institutional actors responding to local governance incentives. By exercising discretion strategically, courts navigate local governance logics within the legal framework.