Working Paper: NBER ID: w20514
Authors: Bronwyn H. Hall; Vania Sena
Abstract: We use an extended version of the well-established Crepon, Duguet and Mairesse model (1998) to model the relationship between appropriability mechanisms, innovation and firm-level productivity. We enrich this model in several ways. First, we consider different types of innovation spending and study the differences in estimates when innovation spending (rather than R&D spending) is used to predict innovation in the CDM model. Second, we assume that a firm simultaneously innovates and chooses among different appropriability methods (formal or informal) to protect the innovation. Finally, in the third stage, we estimate the impact of the innovation output conditional on the choice of appropriability mechanisms on firms' productivity. We find that firms that innovate and rate formal methods for the protection of Intellectual Property (IP) highly are more productive than other firms, but that the same does not hold in the case of informal methods for the protection of a firm's IP, except possibly for large firms as opposed to SMEs. We also find that this result is strongest for firms in the services, trade, and utility sectors, and negative in the manufacturing sector.
Keywords: Appropriability mechanisms; Innovation; Productivity; Intellectual property
JEL Codes: L25; O30; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Firms that innovate and rate formal methods for the protection of intellectual property (IP) highly (O34) | Firms are more productive (D21) |
| Choice of formal appropriability mechanisms (D23) | Productivity (O49) |
| Innovation output (O36) | Productivity (O49) |
| Innovation expenditure and firm characteristics (O31) | Choice between formal and informal appropriability mechanisms (D47) |
| More productive firms (D21) | Opt for formal IP methods (O34) |