Innovation and Appropriability: Revisiting the Role of Intellectual Property

46 Pages Posted: 10 Jul 2023 Last revised: 24 Jul 2023

Date Written: July 2023

Abstract

It is more than 25 years since the authors of the Yale and Carnegie surveys studied how firms seek to protect the rents from innovation. In this paper, we revisit that question using a nationally representative sample of firms over the period 2008-2015, with the goal of updating and extending a set of stylized facts that has been influential for our understanding of the economics of innovation. There are five main findings. First, while patenting firms are relatively uncommon in the economy, they account for an overwhelming share of R&D spending. Second, firms consider utility patents less important on average than other forms of IP protection, like trade secrets, trademarks, and copyrights. Third, industry differences explain a great deal of the level of firms’ engagement with IP, with high-tech firms on average being more active on all forms of IP. Fourth, we find no significant differences in the use of IP strategies across firms at different points of their life cycle. Lastly, unlike age, firms of different size appear to manage IP significantly differently. On average, larger firms tend to engage much more extensively in the protection of IP, and this pattern cannot be easily explained by differences in the type of R&D or innovation produced by a firm. We also discuss the implications of these findings for innovation research and policy.

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Suggested Citation

Mezzanotti, Filippo and Simcoe, Timothy S., Innovation and Appropriability: Revisiting the Role of Intellectual Property (July 2023). NBER Working Paper No. w31428, Available at SSRN: https://ssrn.com/abstract=4505058

Filippo Mezzanotti (Contact Author)

Kellogg School of Management - Department of Finance ( email )

Evanston, IL 60208
United States

Timothy S. Simcoe

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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