Industrial designs and firm performance: evidence from publicly traded Canadian companies, 1990–2014

Abstract

ABSTRACT Industrial designs (IDs) are a specialized type of intellectual property that protects a product's form and presentational features, giving it uniqueness that differentiates it from other products. This paper estimates the effect on firm revenue and profitability of holding IDs. Using a unique data set linking Canadian ID holdings with Canadian publicly traded firms over the years 1990-2014, the authors use two methods to identify a positive association between holding IDs and firm revenue per employee and net income per employee. We contribute to the literature on IDs by introducing controls for patenting, R&D spending, and time-varying sector effects. To determine the marginal effect of each additional ID held, we use a fixed effects regression and find that a 1% increase in the stock of IDs increases revenue per employee by 0.19%. With a nearest-neighbor matching approach, we find a 10% total premium in revenue per employee and a 20% premium in net income per employee among firms holding at least one ID, compared to those with none.