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The influence of patent protection on firm innovation investment in manufacturing industries

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  • Allred, Brent B.
  • Park, Walter G.

Abstract

Countries enact various mechanisms, such as patent protection, to encourage, protect, and reward firm innovation. The degree to which these mechanisms afford firms protection over their intellectual property influences the innovation strategy that firms pursue and innovation investments they make. To date, empirical evidence on the relationship between patent protections and firm innovation is lacking, despite the relationship being the subject of intense theoretical and policy debate. To further consider the influences on firm innovation, we test the influence of a country's patent rights and changes in them on firm-level investment in innovation. Data for 706 firms competing in ten manufacturing industries across 29 countries were gathered and analyzed. Even after controlling for various firm, industry, and national factors, there is a strong positive influence of patent rights and changes in patent rights on a firm's propensity to invest in innovation. In addition, we consider the sensitivity of this result to alternative measures of patent and other intellectual property protection. We also find that the influence of patent rights on firm-level innovation varies across industries for example, the impact appears greatest in the scientific instruments and industrial chemicals industries.

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Article provided by Elsevier in its journal Journal of International Management.

Volume (Year): 13 (2007)
Issue (Month): 2 (June)
Pages: 91-109

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Handle: RePEc:eee:intman:v:13:y:2007:i:2:p:91-109
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Keywords: Patent protection Firm innovation investment Industry dynamism Munificence Concentration;

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Cited by:

  1. OUM Sothea & Narjoko Dionisius & Charles HARVIE, 2014. "Constraints, Determinants of SME Innovation, and the Role of Government Support," Working Papers DP-2014-10, Economic Research Institute for ASEAN and East Asia (ERIA).
  2. Gurrieri, Antonia Rosa, 2013. "Networking entrepreneurs," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 47(C), pages 193-204.
  3. Khoury, Theodore A. & Peng, Mike W., 2011. "Does institutional reform of intellectual property rights lead to more inbound FDI? Evidence from Latin America and the Caribbean," Journal of World Business, Elsevier, vol. 46(3), pages 337-345, July.
  4. Fainshmidt, Stav & White, George O. & Cangioni, Carole, 2014. "Legal Distance, Cognitive Distance, and Conflict Resolution in International Business Intellectual Property Disputes," Journal of International Management, Elsevier, vol. 20(2), pages 188-200.
  5. repec:use:tkiwps:0823 is not listed on IDEAS
  6. Pathak, Saurav & Xavier-Oliveira, Emanuel & Laplume, André O., 2013. "Influence of intellectual property, foreign investment, and technological adoption on technology entrepreneurship," Journal of Business Research, Elsevier, vol. 66(10), pages 2090-2101.
  7. Swan, K. Scott & Allred, Brent B., 2009. "Does 'the China Option' influence subsidiary technology sourcing strategy?," Journal of International Management, Elsevier, vol. 15(2), pages 169-180, June.
  8. Huang, Can & Jacob, Jojo, 2012. "Determinants of quadic patenting: Market access, imitative threat, competition and strength of intellectual property rights," MERIT Working Papers 053, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  9. Nejla YACOUB, 2012. "Brevetabilité des médicament, innovation et l’avenir de l’industrie pharmaceutique en Tunisie DRUGS PATENTABILITY INNOVATION AND THE FUTURE OF THE PHARMACEUTICAL INDUSTRY IN TUNISIA THEORETICAL STUDY ," Working Papers 248, Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO / Research Unit on Industry and Innovation.
  10. Zoltan Acs & Mark Sanders, 2012. "Patents, knowledge spillovers, and entrepreneurship," Small Business Economics, Springer, vol. 39(4), pages 801-817, November.

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