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An Empirical Analysis of the Effects of Patents and Secrecy on Knowledge Spillovers

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  • Schmidt, Tobias

Abstract

Theoretical considerations suggest that secrecy reduces spillovers almost completely through non-disclosure, while the disclosure requirement of patents generates some spillover and at the same time allows firms to appropriate knowledge. In this paper we empirically analyze whether protection by secrecy or protection by patents is associated with lower knowledge spillovers. Since the amount of knowledge spillovers is hard to measure directly, we look at the impact of the usage of protection methods in an industry on the innovation activities of firms using external knowledge. One goal is to assess if firms have moved to a more open innovation business model, i.e. allow more knowledge spillovers to occur despite using protection methods. Our estimations show that the usage of both, patents and secrecy, hinders the innovation activities of firms through the reduction of spillovers to firms in their own industry. We conclude that the appropriability effect of patents outweighs the disclosure effect. We also find some evidence that the open innovation business model has not been implemented widely. --

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Bibliographic Info

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 06-48.

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Date of creation: 2006
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Handle: RePEc:zbw:zewdip:5441

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Keywords: Knowledge Spillovers; patents; secrecy; open innovation; ordered probit;

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  1. Monjon, Stephanie & Waelbroeck, Patrick, 2003. "Assessing spillovers from universities to firms: evidence from French firm-level data," International Journal of Industrial Organization, Elsevier, vol. 21(9), pages 1255-1270, November.
  2. Bessen, James, 2005. "Patents and the diffusion of technical information," Economics Letters, Elsevier, vol. 86(1), pages 121-128, January.
  3. Kaiser, Ulrich, 1999. "Measuring Knowledge Spillovers in Manufacturing and Services: An Empirical Assessment of Alternative Approaches," ZEW Discussion Papers 99-62, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Wesley M Cohen & Richard R Nelson & John P Walsh, 2003. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (Or Not)," Levine's Working Paper Archive 618897000000000624, David K. Levine.
  5. Belderbos, Rene & Carree, Martin & Diederen, Bert & Lokshin, Boris & Veugelers, Reinhilde, 2004. "Heterogeneity in R&D cooperation strategies," International Journal of Industrial Organization, Elsevier, vol. 22(8-9), pages 1237-1263, November.
  6. Michele Cincera, 2005. "Firms' productivity growth and R&D spillovers: An analysis of alternative technological proximity measures," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 14(8), pages 657-682.
  7. Nooteboom, Bart, 1999. "Innovation, Learning and Industrial Organisation," Cambridge Journal of Economics, Oxford University Press, vol. 23(2), pages 127-50, March.
  8. Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x, December.
  9. Bruno Cassiman & Reinhilde Veugelers, 2002. "R&D Cooperation and Spillovers: Some Empirical Evidence from Belgium," American Economic Review, American Economic Association, vol. 92(4), pages 1169-1184, September.
  10. Schmidt, Tobias, 2005. "Knowledge Flows and R&D Co-operation: Firm-level Evidence from Germany," ZEW Discussion Papers 05-22, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  11. Julien Pénin, 2003. "Patents versus ex-post rewards: a new look," Working Papers of BETA 2003-09, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  12. Bonte, Werner & Keilbach, Max, 2005. "Concubinage or marriage? Informal and formal cooperations for innovation," International Journal of Industrial Organization, Elsevier, vol. 23(3-4), pages 279-302, April.
  13. Wolfgang Sofka & Tobias Schmidt, 2005. "I Like the Way you Move - An Empirical Investigation into the Mechanisms Behind First Mover and Follower Strategies," Industrial Organization 0506010, EconWPA.
  14. Klaus Kultti & Tuomas Takalo & Juuso Toikka, 2007. "Secrecy versus patenting," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 22-42, 03.
  15. Keld Laursen & Ammon Salter, 2005. "My Precious. The Role of Appropriability Strategies in Shaping Innovative Performance," DRUID Working Papers 05-02, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  16. Schmidt, Tobias, 2005. "Absorptive Capacity: One Size Fits All? Firm-level Analysis of Absorptive Capacity for Different Kinds of Knowledge," ZEW Discussion Papers 05-72, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  17. Arundel, Anthony, 2001. "The relative effectiveness of patents and secrecy for appropriation," Research Policy, Elsevier, vol. 30(4), pages 611-624, April.
  18. Joachim Inkmann, 2000. "Horizontal and Vertical R&D Cooperation," CoFE Discussion Paper 00-02, Center of Finance and Econometrics, University of Konstanz.
  19. Antoine Bureth & Rachel Levy & Julien Pénin & Sandrine Wolff, 2005. "Strategic Reasons for Patenting: Between Exclusion and Coordination Rationales," Rivista di Politica Economica, SIPI Spa, vol. 95(5), pages 19-46, September.
  20. Arundel, Anthony & Kabla, Isabelle, 1998. "What percentage of innovations are patented? empirical estimates for European firms," Research Policy, Elsevier, vol. 27(2), pages 127-141, June.
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Cited by:
  1. Slivko, Olga, 2012. "Innovation strategies of German firms: The effect of competition and intellectual property protection," ZEW Discussion Papers 12-089, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Faria, Pedro & Schmidt, Tobias, 2007. "International cooperation on innovation: empirical evidence for German and Portuguese firms," Discussion Paper Series 1: Economic Studies 2007,30, Deutsche Bundesbank, Research Centre.

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