The Moderating Effect of Intellectual Property Rights on Relationship between Innovation and Company Performance in Manufacturing Sector

Abstract

Abstract This paper examines whether the intellectual property rights of manufacturing company moderate the relationships between innovation and company performance in manufacturing sector. We argue that technologically more advanced manufacturers rely on exploiting intellectual capital in their business. Thus, there is a growth of the use of formal intellectual property protection methods because protective rights are critical as it prevents replication by potential competitors. The objective of the study is to understand how intellectual property rights contribute as new ventures transform their innovation potential and creativity into market value, profit, productivity, new jobs, wages, and competitiveness. The multi-item constructs were tested by exploratory factor analysis (EFA) each set of scale items using the principal axis with the varimax method provided in SPSS. This procedure may help to reduce multi-collinearity or error variance correlations among indicators in the confirmatory factor analysis (CFA). The findings indicate a positive correlation between patenting and new ventures’ growth, access to venture capital and new knowledge. This study provides empirical evidence that intellectual property is a set of valuable intangible assets and managing innovation better than its competitors is one of the main objectives of a manufacturing company.