Intellectual Property Strategy and Reverse Innovation

Abstract

In this paper, we compare the role of outward-bound international patenting in “reverse innovation” and in conventional international modes of innovation. Through analysis of panel data from 148 countries over 18 years, we reveal that, while all countries may in principle appropriate economic benefits from endogenous technological innovation by increasing their level of outward-bound international patenting, the ability of a country to do so may be hampered by the pre-existing level of its economy. We classify countries in to four strategic innovation quadrants—Inventors, Innovators, Traders, and Slow Movers—based on the relative change over time in their competitiveness in international patenting and their per capita wealth. The mix of wealthy countries and less wealthy countries varies greatly between quadrants, with the wealthy countries dominating the Innovators quadrant and the less wealthy countries exhibiting inertia in translating invention in to innovation. We conclude that, for lower income countries to improve their success in appropriating the benefits of reverse innovation, innovators and would-be innovators based in those countries need to develop sophistication and prowess in international patenting strategy and intellectual property management tailored to the unique conditions of each country.