Ideology on Trial: How CEO Political Leanings Shape Firms' Propensity to Litigate Over Patents

ABSTRACT This study investigates how CEOs' political ideology affects corporate decisions to sue for patent infringement. Integrating upper‐echelons and behavioral‐agency perspectives, we theorize that conservative‐leaning CEOs—marked by heightened threat sensitivity and low tolerance for ambiguity—frame infringement as a looming loss and therefore favor litigation as the most rule‐bound, controllable response. Liberal CEOs, by contrast, are less likely to initiate litigation. We further contend that recent firm performance amplifies this ideological imprint: when results exceed aspirations, the ideology–litigation relationship steepens, with conservative CEOs becoming more likely to file and liberal CEOs less likely to do so; when performance weakens, this divide narrows. These propositions are tested on an unbalanced panel of 1275 US firm‐year observations, obtained by linking political‐donation records with patent, financial and litigation data. Results confirm that conservative CEOs significantly raise the odds of initiating a patent suit; the effect strengthens at high performance levels and weakens when performance falls below industry benchmarks. By exposing the ideological microfoundations of patent enforcement, the study extends competitive‐dynamics research, demonstrates how personal values shape nonmarket strategies and competitive tactics. Consequently, we alert boards, R&D managers and investors to a behavioral driver of costly patent disputes.