NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Appropriability Mechanisms, Innovation and Productivity: Evidence from the UK

Bronwyn H. Hall, Vania Sena

NBER Working Paper No. 20514
Issued in September 2014
NBER Program(s):   IO   PR

We use an extended version of the well-established Crepon, Duguet and Mairesse model (1998) to model the relationship between appropriability mechanisms, innovation and firm-level productivity. We enrich this model in several ways. First, we consider different types of innovation spending and study the differences in estimates when innovation spending (rather than R&D spending) is used to predict innovation in the CDM model. Second, we assume that a firm simultaneously innovates and chooses among different appropriability methods (formal or informal) to protect the innovation. Finally, in the third stage, we estimate the impact of the innovation output conditional on the choice of appropriability mechanisms on firms' productivity. We find that firms that innovate and rate formal methods for the protection of Intellectual Property (IP) highly are more productive than other firms, but that the same does not hold in the case of informal methods for the protection of a firm's IP, except possibly for large firms as opposed to SMEs. We also find that this result is strongest for firms in the services, trade, and utility sectors, and negative in the manufacturing sector.

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Document Object Identifier (DOI): 10.3386/w20514

forthcoming in Economics of Innovation and New Technology

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