Buss and Peukert (2015)
|Buss and Peukert (2015)|
|Title:||R&D outsourcing and intellectual property infringement|
|Author(s):||Buss, P., Peukert, C.|
|Citation:||Buss, P., & Peukert, C. (2015). R&D outsourcing and intellectual property infringement. Research Policy, 44(4), 977-989.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|About the Data|
|Data Description:||The survey has been conducted on 2500 companies|
|Data Type:||Primary and Secondary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:||No|
|Time Period(s) of Collection:||
The article empirically addresses value appropriation hazards when firms enter into external relationships in search for innovation. Using firm-level data from Germany, the paper documents a positive link between R&D outsourcing and intellectual property infringement. In line with theory, the authors show that this effect varies with the market value of knowledge, and the allocation of property rights. It is discussed how outsourcing induced spillovers may foster technology diffusion, affecting industry evolution and market structure.
Main Results of the Study
- The coeﬃcient of large ﬁrms in the invention model is signiﬁcant at the one percent level, indicating that companies with more than 250 employees face a higher likelihood of infringement of technical inventions than medium-sized ﬁrms (50–249 employees). Apart from that, the authors do not ﬁnd huge diﬀerences across size groups. The coeﬃcients of R&D Intensity and % University Degree are only signiﬁcant in the invention model. As expected, diﬀerences between regions are important. Firms in East Germany have a lower risk of imitation throughout all IP categories. The coeﬃcient of Exporter shows the expected positive sign and is signiﬁcant in all speciﬁcations.
- They find considerable diﬀerences between types of industries. Knowledge intensive manufacturing ﬁrms have the highest likelihood of infringement throughout. This is more pronounced concerning infringement of inventions and designs, less so for infringement of products.
- The estimated coeﬃcient of R&D Outsourcing has the expected positive sign in all models. Much in line with what already saw in the descriptive statistics, the point estimate is largest concerning infringement of inventions, smaller concerning infringement of designs (this diﬀerence is not signiﬁcant, however), and smallest concerning imitation of products. Compared to infringement of inventions, the outsourcing eﬀect is signiﬁcantly smaller (value 0.07) concerning infringement of products. This is in line with their expectation that the correlation between R&D outsourcing and infringement of generic knowledge is stronger than the correlation between R&D outsourcing and infringement of speciﬁc knowledge.
- The empirical analysis has shown that R&D outsourcing is a channel through which ﬁrms become aware of other ﬁrms’ technical developments, designs and products. Across a number of diﬀerent speciﬁcations, we present evidence that this eﬀect is more pronounced for generic compared to ﬁrm-speciﬁc IP. Further analyses suggest that the allocation of property rights can reduce spillovers. Keeping close ties to competitors in the sense of actively collaborating in innovation projects, and securing appropriability by the means of contractual agreements seems to be especially eﬀective. Furthermore the analyses show that formal IP protection lowers the infringement risk. The striking result however is that vertical R&D outsourcing almost always bears some IP infringement risk, even when ﬁrms employ measures of formal IP protection
Policy Implications as Stated By Author
The results suggest that value-appropriation challenges are clearly evident with respect to technical inventions and designs. Thus, in cases where the latter represent critical core knowledge, managers should be cautious when it comes to buying external R&D. At the same time, this suggests that managers can at least partly inﬂuence the imitation risk by contracting out more speciﬁc tasks, that are less easy to transfer into a diﬀerent commercial context. On that note it may also pay out to deﬁne con tractual terms which help to ‘artiﬁcially’ increase speciﬁcity. However, sometimes the beneﬁts of R&D outsourcing may still prevail. When we think of products as modular combinations of early stage R&D, a ﬁrm might proﬁt from external contributors (although under risk of loosing control over early stage IP) and simultaneously be able to secure its competitive ad vantage on the ﬁnal product market. Clearly specifying the allocation of property rights is not only useful to align incentives, resulting in higher innovation eﬀorts of the vendor (Arora and Merges, 2004; Leiponen, 2008), but also reduces the infringement risk. This will be especially valuable for ﬁrms that operate in sectors that have limited access to formal measures of IP protection.
Coverage of Study
|Level of aggregation:||Company|
|Period of material under study:||2005-2007|