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Innovation in the Service Sector and the Role of Patents and Trade Secrets

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  • Masayuki Morikawa

Abstract

This paper, using Japanese firm-level data, presents findings about innovative activities in the service sector and the role of patents and trade secrets on innovation. According to the analysis, first, service firms have fewer product innovations than do manufacturing firms, but the productivity of innovative service firms is very high. Second, service firms have a low propensity for holding patents, but their holding of trade secrets is comparable to that of the manufacturing firms. Third, patents and trade secrets have positive relationships with product innovations, and the effects are quantitatively similar in magnitude, in both the manufacturing and the service sectors. On the other hand, a positive relationship between trade secrets and process innovations is found only in the manufacturing sector. These results suggest a pivotal role of the law protecting trade secrets on innovation and productivity growth in the service sector.

Suggested Citation

  • Masayuki Morikawa, 2014. "Innovation in the Service Sector and the Role of Patents and Trade Secrets," CAMA Working Papers 2014-48, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:camaaa:2014-48
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    Cited by:

    1. Bronwyn H. Hall & Vania Sena, 2017. "Appropriability mechanisms, innovation, and productivity: evidence from the UK," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(1-2), pages 42-62, February.
    2. Kato, Takao & Kodama, Naomi, 2019. "The Consequences of Short-Time Compensation: Evidence from Japan," IZA Discussion Papers 12596, Institute of Labor Economics (IZA).
    3. Limei Sun & Jinyu Wang & Zhicheng Wang & Leorey Marquez, 2020. "Mechanism of Carbon Finance’s Influence on Radical Low-Carbon Innovation with Evidence from China," Sustainability, MDPI, vol. 12(18), pages 1-14, September.
    4. Shivendu Pratap Singh & Trina A. Sego & Shikhar Sarin, 2022. "Overcoming bias against funding of female-led entrepreneurial initiatives: the democratizing influence of online crowdlending platforms," Service Business, Springer;Pan-Pacific Business Association, vol. 16(4), pages 907-933, December.
    5. Zhiwen Li & Oswin Aganda Anaba & Zhiqiang Ma & Mingxing Li, 2021. "Ghanaian SMEs Amidst the COVID-19 Pandemic: Evaluating the Influence of Entrepreneurial Orientation," Sustainability, MDPI, vol. 13(3), pages 1-27, January.
    6. Gnangnon, Sèna Kimm, 2024. "Effects of intellectual property rights protection on services export diversification in developing countries," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 46(1), pages 53-89.

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    More about this item

    Keywords

    innovation; service sector; patent; trade secret;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • L80 - Industrial Organization - - Industry Studies: Services - - - General

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