Scandinavian Working Papers in Economics

Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

No 411: Appropriability Mechanisms, Innovation and Productivity:Evidence from the UK

Bronwyn H. Hall () and Vania Sena ()
Additional contact information
Bronwyn H. Hall: University of California at Berkeley and University of Maastricht; NBER, IFS London, and NIESR
Vania Sena: Essex Business School, University of Essex

Abstract: We use an extended version of the wellestablished Crepon, Duguet and Mairesse model (1998) to model the relationship between appropriability mechanisms, innovation and firmlevel 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 supposed 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: productivity; innovation; intellectual property; appropriability; patents; CDM

JEL-codes: L25; O30; O34

45 pages, June 18, 2015

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