*2.1. Government Policy and Corporate Innovation*

Our research is related to the literature about how macro country characteristics, such as laws and policies, affect corporate innovation. Conventional policies, such as intellectual property protection [25–27], bankruptcy laws [28,29], universal demand laws [30–32], internet blockade orders [33], emissions trading scheme pilots [34], and antitrust laws [35], have been well studied. Recently, a growing number of studies have focused on the policies that aim to protect the interests of employees and investigated how these laws affect the incentives to innovate [36]. For example, ref. [37] estimated the impact of wrongful discharge laws, which protect employees against unjust dismissal, on innovation. Using the staggered adoption of wrongful discharge laws across U.S. states, they found that the laws indeed had a positive impact on innovation and new firm creation. Ref. [38] revealed a positive causal effect between the passage of smoke-free laws, which banned smoking in workplaces, and corporate innovation measured by patents and patent citations. Ref. [11] examined the effect of state-level stakeholder orientation policies, known as constituency statutes, which allow directors to consider the interests of stakeholders such as employees when making business decisions, on firm innovation. Although prior studies have focused on employee protection laws, the direct effect of MSER on innovation remains unclear.
