Intellectual Property Rights Protection, Investment, and Firm Growth
83 Pages Posted: 22 Nov 2017 Last revised: 7 Sep 2023
Date Written: September 5, 2023
Abstract
This paper examines whether strong intellectual property rights (IPR) protection fosters or deters corporate investment and firm growth. Exploiting the adoption and later nullification of state law that prohibits competitors from duplicating products using an efficient reverse engineering process, I find that physical and intangible capital expenditures and sales and employment growth rates increase following the law’s passage and decrease after a U.S. Supreme Court ruling overturns it. More pronounced effects for firms in less concentrated industries and increases in profitability suggest that strong IPR protection incentivizes innovation-driven investment and growth by reducing the competitive threat of product imitation.
Keywords: Intellectual property rights protection, Innovation, Physical and intangible capital investment, Sales and employment growth, Product market competition
JEL Classification: G32, K22, O31, O32, O34
Suggested Citation: Suggested Citation