2025/26 | LEM Working Paper Series | ||||||||||||||||
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Exploring the nexus between appropriability and productivity in highly innovative and globalised companies |
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Keywords | |||||||||||||||||
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panel data, appropriability, productivity
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JEL Classifications | |||||||||||||||||
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C23, O34
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Abstract | |||||||||||||||||
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This paper identifies the dichotomous role (bright
and dark sides) of Intellectual Property Rights
(IPR) protection on labor productivity among
highly innovative globalised firms. The role of
appropriability conditions -such as IPR
protection- as "Schumpeterian" incentive to
innovation has been largely explored in the
empirical literature. In this paper, we contribute
to this strand explore the role of appropriability
conditions on firm labor productivity under
different configurations of R&D activities in
highly globalized companies. In line with the
literature, we show that labor, capital and R&D
investments lead to productivity gains, and that
the strength of the patent system the firm is
embedded into is positively linked to the firm's
labor productivity too. We call this the 'bright
side' of IPR. However, stronger intellectual
property rights might have a detrimental effect on
the R&D returns, which appear to be maximized
around the median level of IPR protection. In
other words, too much protection might actually
reduce R&D returns, again in line with the
"Schumpeterian prediction". Then, we call this the
'dark side' of IPR. To our knowledge, this is the
first paper highlighting such dichotomy (bright
and dark sides of IPR) on a purpose-built
high-quality database of globalized firms, which
tend to be the most innovative firms in the world.
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