Innovation or Imitation? The Role of Intellectual Property Rights Protections
Journal of Multinational Financial Management 23, 2013
52 Pages Posted: 10 Jul 2015
Date Written: November 1, 2012
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: Suggested Citation