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Information asymmetry and the inefficiency of informal ip strategies within employment relationships

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  • Wang, Runhua

Abstract

Employee mobility and betrayal increase the risks of disclosing unpublished technical information. This study builds a theoretical foundation for the loss of unpublished technical information regarding human capital. It analyzes the inefficiency of informal intellectual property (“IP”) strategies, which include non-disclosure agreements (“NDAs”), covenants not to compete (“CNCs”), and trade secrets, from the maximum probable loss approach. It bridges the legal literature and the economics literature by emphasizing and explaining the information asymmetries in employment relationships regarding the informal IP strategies. NDAs need to be supplemented by CNCs or trade secret law. Enforceable CNCs and trade secrets have a reward function, but trade secrets are more efficient in informal IP management and innovation. Beyond the legal risks imposed by informal IP, companies should actively improve employee loyalty and their security culture through employee management.

Suggested Citation

  • Wang, Runhua, 2021. "Information asymmetry and the inefficiency of informal ip strategies within employment relationships," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    • Handle: RePEc:eee:tefoso:v:162:y:2021:i:c:s0040162520311616
    DOI: 10.1016/j.techfore.2020.120335
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    Cited by:

    1. Zhixue Liu & Ronggui Ding, 2023. "Dynamic Evaluation of Project Governance in Collaborative Innovation Projects: A Case of Industry Technology Research Institute," Sustainability, MDPI, vol. 15(16), pages 1-21, August.

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    More about this item

    Keywords

    Informal intellectual property; Information asymmetries; Unpublished technical information; Innovation; Intellectual property strategy;
    All these keywords.

    JEL classification:

    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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