Strategic utilization of software patents to counteract rival penetration in the IT industry

•Explore the competitive effects of software patents and the amplifying role of company capabilities.•Software patents held by a company negatively correlate with the market value of its competitors.•Competitors’ enhanced R&D capabilities can mitigate the adverse effects of these patents on their value.•Marketing and operational strengths of a company can enhance the economic gains from its software patents.•Utilize a stochastic frontier analysis to assess IT firms’ distinct capabilities along the value chain.