Buss and Peukert (2015)
Contents
Source Details
| Buss and Peukert (2015) | |
| Title: | R&D outsourcing and intellectual property infringement |
| Author(s): | Buss, P., Peukert, C. |
| Year: | 2015 |
| Citation: | Buss, P., & Peukert, C. (2015). R&D outsourcing and intellectual property infringement. Research Policy, 44(4), 977-989. |
| Link(s): | Definitive , Open Access |
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| About the Data | |
| Data Description: | The survey has been conducted on 2500 companies |
| Data Type: | Primary and Secondary data |
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| Cross Country Study?: | No |
| Comparative Study?: | No |
| Literature review?: | No |
| Government or policy study?: | No |
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Abstract
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 contractual terms which help to ‘artificially’ increase specificity. However, sometimes the benefitsof R&D outsourcing may still prevail. When we think of products as modular combinationsof early stage R&D, a firm might profit from external contributors (although under risk ofloosing control over early stage IP) and simultaneously be able to secure its competitive advantage on the final product market. Clearly specifying the allocation of property rights is notonly useful to align incentives, resulting in higher innovation efforts of the vendor (Arora andMerges, 2004; Leiponen, 2008), but also reduces the infringement risk. This will be especiallyvaluable for firms that operate in sectors that have limited access to formal measures of IPprotection.
Coverage of Study
Datasets
| Sample size: | 2,500 |
| Level of aggregation: | Company |
| Period of material under study: | 2005-2007 |
