Innovation or Imitation? The Role of Intellectual Property Rights Protections

Journal of Multinational Financial Management 23, 2013

52 Pages Posted: 10 Jul 2015

See all articles by Joseph P. H. Fan

Joseph P. H. Fan

The Chinese University of Hong Kong (CUHK) - School of Accountancy

Stuart Gillan

University of Georgia - Department of Finance

Xin Yu

University of Queensland

Date Written: November 1, 2012

Abstract

We study how uncompensated research and development (R&D) spillovers - the leakage of proprietary information through imitation or theft - affect firms’ investment decisions. Using variation in property rights protections across different regions within China we find that 1) uncompensated spillovers are greater in regions with weaker property rights, 2) such spillovers are associated with lower R&D expenditures, and 3) the latter is exacerbated in low property rights regimes. In addition to identifying a specific channel through which legal protections affect incentives for innovation and R&D, our results support arguments in the literature that the enforcement of property rights affects firm investment and growth.

Keywords: Innovation, Imitation, Intellectual property rights

JEL Classification: G1, O3

Suggested Citation

Fan, Po Hung Joseph P. H. and Gillan, Stuart L. and Yu, Xin, Innovation or Imitation? The Role of Intellectual Property Rights Protections (November 1, 2012). Journal of Multinational Financial Management 23, 2013. Available at SSRN: https://ssrn.com/abstract=2628531

Po Hung Joseph P. H. Fan

The Chinese University of Hong Kong (CUHK) - School of Accountancy ( email )

Shatin, N.T.
Hong Kong
(852) 26097839 (Phone)
(852) 26035114 (Fax)

Stuart L. Gillan

University of Georgia - Department of Finance ( email )

Terry College of Business
Athens, GA 30602-6253
United States

Xin Yu (Contact Author)

University of Queensland ( email )

St Lucia
Brisbane, Queensland 4072
Australia

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