No abstract

We survey the economic literature, both theoretical and empirical, on the choice of intellectual property protection by firms. Our focus is on the trade-offs between using patents and disclosing versus the use of secrecy, although we also look briefly at the use of other means of formal intellectual property protection. (JEL D82, K11, O31, O34)

A surprisingly small number of innovative firms use the patent system. In the UK, the share of firms patenting among those reporting that they have innovated is about 4%. Survey data from the same firms support the idea that they do not consider patents or other forms of registered IP as important as informal IP for protecting inventions. We show that there are a number of explanations for these findings: most firms are SMEs, many innovations are new to the firm, but not to the market, and many sectors are not patent active. We find evidence pointing to a positive association between patenting and innovative performance measured as turnover due to innovation, but not between patenting and subsequent employment growth. The analysis relies on a new integrated dataset for the UK that combines a range of data sources into a panel at the enterprise level.JEL classifications: L21, L25, O34.

Firm survival, Intellectual property, Start-ups, D21, L25, L26, M13,

We develop Lancaster's model of consumer behaviour under product differentiation to analyse Schumpeterian creative destruction. Launching new products with novel characteristics enables firms to temporarily steal market share from rivals. Product launch is monitored by using trade marks, patents and research and development. The dataset covers a large sample of UK service and manufacturing firms. We find that stock market value is positively associated with own trade mark activity and trade markactive firms achieve significantly higher valueadded. Greater trade mark activity by competitors reduces net output of firms, but raises their stock market value. This is consistent with the Schumpeterian process of competition through innovation.

This paper considers the value of innovation to large Australian ¢rms. Speci¢cally, we investigate how R&D and intellectual property activity in£uences the market value of ¢rms, using a Tobin's q approach. R&D data are available for the period 1994^96 and data on patent, trade mark and design applications for 1996. The ¢ndings suggest that R&D and patent activity are positively and signi¢cantly associated with market value. The results also suggest that private returns to R&D in Australia are low by international standards.

This paper analyses market valuations of UK companies using a new data set of their R&D and IP activities (1989-1999). In contrast to previous studies, the analysis is conducted at the sectoral level, where the sectors are based on the technological classification in Pavitt (1984). The first main result is that the valuation of R&D and IP varies substantially across these sectors. To explore these variations the paper links competitive conditions with the market valuation of innovation. Using profit persistence as a measure of competitive pressure, we find that the sectors that are the most competitive have the lowest market valuation of R&D. Furthermore, within the most competitive sector ('science based'), firms with larger market shares (an inverse indicator of competitive pressure) also have higher R&D valuations. Another important result is that, on average, firms that receive only UK patents tend to have no market premium. In direct contrast, patenting through the European Patent Office does raise market value, as does the registration of trade marks in the UK.

No abstract