We notice that you are using Internet Explorer to view our website. Please note that we currently do not support that browser for accessing certain features. To improve your browsing experience, please use either Firefox or Chrome.
We explore the decisions of firms to defend their locally and globally generated knowledge in foreign markets to better understand the knowledge management and protection strategies of MNCs across countries. Building on the knowledge management and competitor dynamics literatures, we explore both why firms may be more likely to defend some types of innovations over others and how industry characteristics influence the litigation activities of firms. Empirical results using data from Orbis, Patstat and litigation data from Lex Machina show that firms are more likely to defend patents that are locally-generated and that have a wider scope of use across countries. Taken together, our results suggest that firms may be using litigation to send signals to rivals about local knowledge claims and globally-used firm innovations.
Distance Puzzle in Knowledge Spillovers: A Revisit From The Legal Perspective
The University of Hong Kong Yanfeng Zheng,
University of Hong Kong
Recent studies found that the localization of knowledge spillovers surprisingly strengthened during the past few decades. We develop a model to understand this phenomenon from a legal perspective. Our model shows that a stronger patent protection leads to more localized spillovers by elevating the legal cost for knowledge receivers. We test the model predictions exploiting the introduction of the Court of Appeals for the Federal Circuit (CAFC) in 1982, a remarkable pro-patent shift in the US. Using approximately 2.6 million actual and control citations, we find that knowledge spillovers became more localized after the CAFC and this change was more pronounced for areas less friendly to patent owners in pre-CAFC litigations. We contribute to the literature by introducing a legal perspective and offer policy implications.
Location: Destiny or Strategy?
Bocconi University Vijay Venkataraman,
Indian Institute of Management Bangalore David Ku,
Georgia Institute of Technology
Agglomeration literature has predominantly focused on the geographic differences in outcomes and has offered limited insights on whether firms operating elsewhere benefit by moving into industry clusters. Using the context of the US medical device industry, we suggest that, even though the better performing firms are more likely to move to an industry cluster, their post-move performance suffers relative to their past performance and relative to comparable firms that did not move. Preliminary evidence suggests that while firms move to clusters to take advantage of Marshallian externalities, the cost of network disruption outweighs the benefits. Thus, we extend the literature by arguing that the benefits of agglomeration may be restricted to firms born there and that the treatment effects of agglomeration are harder to materialize.
The State Advances and the Private Retreats? Impacts on the Innovation of Privately Owned Enterprises
Cyndi Man Zhang,
Singapore Management University Kenneth Huang,
National University of Singapore
We explore whether and how state entry into privately owned enterprises (POEs) affects POEs’ innovation performance in China. Using a treatment group of POEs affected by state entry matched to a control group of comparable POEs not affected by state entry, our difference-in-differences estimates show that state entry has a significant negative impact on the quantity of patented innovations produced by the POEs but has little effect on the novelty of the patented innovations. Further, we find that POEs in emerging strategic industries identified by the state are able to continue ramping up the quantity of patented innovations despite significant state entry; POEs with a high level of accumulated technological capabilities continue to generate a greater proportion of novel innovations.