IDEAS home Printed from https://ideas.repec.org/a/taf/ijecbs/v26y2019i1p39-64.html
   My bibliography  Save this article

Patent Protection, Startup Takeovers, and Open Innovation

Author

Listed:
  • In-Uck Park
  • Andreas Panagopoulos

Abstract

Open innovation largely relies on startup innovators transferring their R&D to incumbent firms. Yet, such innovators are at a disadvantage when faced with incumbents holding patent portfolios, raising the question why do such Lilliputian firms choose to innovate? In view of this, we study the impact of patent protection on the innovation incentives of startup firms in a dynamic model where an incumbent faces a sequence of potential startups and the incumbent’s chance of winning an infringement lawsuit increases with the size of its patent portfolio. It is shown that open innovation–style takeover deals generate extra benefits for the incumbent via its enhanced future bargaining positions, a part of which accrues to the current startup as an increased bargaining share, justifying R&D activity that would not have taken place otherwise.

Suggested Citation

  • In-Uck Park & Andreas Panagopoulos, 2019. "Patent Protection, Startup Takeovers, and Open Innovation," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 26(1), pages 39-64, January.
  • Handle: RePEc:taf:ijecbs:v:26:y:2019:i:1:p:39-64
    DOI: 10.1080/13571516.2018.1553285
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/13571516.2018.1553285
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:ijecbs:v:26:y:2019:i:1:p:39-64. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/CIJB20 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.