Abstract
This paper tries to find how firms use IPRs in the form of patents to protect innovation capital and find determinants of their effectiveness. The research is based on a large sample of 2960 Polish manufacturing firms that were engaged in developing and/or implementing a product or process innovation in the years 2010–2012. Besides descriptive statistics which show firms’ attitudes toward the effectiveness of patents and their determinants, I apply the knowledge production function to find a link between patent propensity, R&D and innovation performance. Descriptive analyses show that Polish manufacturing firms rarely use patents as the appropriability mechanism, which results in the low level of their perceived effectiveness. It also turns out that the perceived effectiveness of a patent depends on a firm’s size, the innovation type and technological opportunities. In turn, the results of the knowledge production function estimation allow me to conclude that an increase in patent propensity affects the firm’s innovation performance positively.
Highlights
Innovation capital constitutes to draw the attention of scholars and practitioners, because the ability to innovate is a source of a firm’s value and growth in a knowledge based economy (Sullivan, 2000, pp. 4-22)
A model used in this research is a knowledge production function, in which two main components of innovation capital, i.e. patents and research and development (R&D), are included among the regressors
As far as the patent variable is considered, the results indicate that there is a positive relationship between the number of patent applications and innovation performance
Summary
Innovation capital constitutes to draw the attention of scholars and practitioners, because the ability to innovate is a source of a firm’s value and growth in a knowledge based economy (Sullivan, 2000, pp. 4-22). There are different appropriability mechanisms, combining formal methods in the form of intellectual property rights – IPRs (e.g. patents) and informal methods (e.g. secrecy, lead time, product complexity) which can be used by economic agents to protect the innovative knowledge they create. The lack of appropriability mechanisms would lead to underinvestment in research and innovation, and inefficiency of firms and economies. The purpose of the paper is to fill this gap in the literature by determining how the utilization of intellectual property rights (IPRs) in the form of patents allows Polish manufacturing firms to appropriate profits from innovation. I use descriptive statistics to analyze the perceived effectiveness of patents toward increasing the competitiveness of product and process innovations
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