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Innovation strategies of German firms: The effect of competition and intellectual property protection

  • Slivko, Olga

This article analyzes how the perceived effectiveness of intellectual property protection and competitive pressure affect firms' innovation strategy choices, concretely, whether to abstain from innovation, to introduce products that are known in the market but new to the firm (imitation) or to introduce market novelties (innovation). Using a sample of 1253 German firms from manufacturing and services sectors I show that the perceived effectiveness of patent protection positively affects firms' propensity to imitate and to innovate. Having a small or a medium number of competitors positively affects firms' propensity to imitate and to innovate as compared to being a monopolist or having a large number of competitors. However, this effect varies with the perceived patent protection effectiveness. If the perceived patent protection effectiveness is low or medium, both innovation and imitation are enhanced, whereas if it is high, only innovation is enhanced.

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 12-089.

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Date of creation: 2012
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Handle: RePEc:zbw:zewdip:12089
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  1. Anker Lund Vinding, 2006. "Absorptive capacity and innovative performance: A human capital approach," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(4-5), pages 507-517.
  2. Czarnitzki, Dirk & Etro, Federico Gabriele & Kraft, Kornelius, 2008. "The Effect of Entry on R&D Investment of Leaders: Theory and Empirical Evidence," ZEW Discussion Papers 08-078, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Reinganum, Jennifer F, 1983. "Uncertain Innovation and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 73(4), pages 741-48, September.
  4. Vega-Jurado, Jaider & Gutiérrez-Gracia, Antonio & Fernández-de-Lucio, Ignacio & Manjarrés-Henri­quez, Liney, 2008. "The effect of external and internal factors on firms' product innovation," Research Policy, Elsevier, vol. 37(4), pages 616-632, May.
  5. Michele Boldrin & David K Levine, 2002. "Perfectly Competitive Innovation," Levine's Working Paper Archive 625018000000000192, David K. Levine.
  6. Alexander Schiersch & Jens Schmidt-Ehmcke, 2011. "Is the Boone-Indicator Applicable? – Evidence from a Combined Data Set of German Manufacturing Enterprises," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 231(3), pages 336-357, June.
  7. Tuomas Takalo, 1998. "Innovation and imitation under imperfect patent protection," Journal of Economics, Springer, vol. 67(3), pages 229-241, October.
  8. James Bessen & Eric Maskin, 2009. "Sequential innovation, patents, and imitation," RAND Journal of Economics, RAND Corporation, vol. 40(4), pages 611-635.
  9. Bruno Crepon & Emmanuel Duguet & Jacques Mairesse, 1998. "Research, Innovation And Productivity: An Econometric Analysis At The Firm Level," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 7(2), pages 115-158.
  10. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: An Inverted-U Relationship," The Quarterly Journal of Economics, MIT Press, vol. 120(2), pages 701-728, May.
  11. Michael Koenig & Jan Lorenz & Fabrizio Zilibotti, 2012. "Innovation vs. Imitation and the Evolution of Productivity Distributions," Discussion Papers 11-008, Stanford Institute for Economic Policy Research.
  12. Gilbert, Richard J & Newbery, David M G, 1982. "Preemptive Patenting and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 72(3), pages 514-26, June.
  13. Arora, Ashish & Gambardella, Alfonso, 1994. "The changing technology of technological change: general and abstract knowledge and the division of innovative labour," Research Policy, Elsevier, vol. 23(5), pages 523-532, September.
  14. Schmidt, Tobias, 2006. "An Empirical Analysis of the Effects of Patents and Secrecy on Knowledge Spillovers," ZEW Discussion Papers 06-48, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  15. Juan A. Correa, 2012. "Innovation and competition: An unstable relationship," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 27(1), pages 160-166, 01.
  16. Elena Cefis & Luigi Orsenigo, 1998. "The Persistence of Innovative Activities. A Cross-Countries and Cross-Sectors Comparative Analysis," Department of Economics Working Papers 9804, Department of Economics, University of Trento, Italia.
  17. Gans, Joshua S. & Stern, Scott, 2003. "The product market and the market for "ideas": commercialization strategies for technology entrepreneurs," Research Policy, Elsevier, vol. 32(2), pages 333-350, February.
  18. Futia, Carl A, 1980. "Schumpeterian Competition," The Quarterly Journal of Economics, MIT Press, vol. 94(4), pages 675-95, June.
  19. Serguey Braguinsky & Salavat Gabdrakhmanov & Atsushi Ohyama, 2007. "A Theory of Competitive Industry Dynamics With Innovation and Imitation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(4), pages 729-760, October.
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