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Innovation or imitation?

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  • Fan, Joseph P.H.
  • Gillan, Stuart L.
  • Yu, Xin

Abstract

We study how uncompensated research and development (R&D) spillovers – the leakage of proprietary information through imitation or theft – affect firms’ investment decisions. Using variation in property rights protections across different regions within China we find that (1) uncompensated spillovers are greater in regions with weaker property rights, (2) such spillovers are associated with lower R&D expenditures, and (3) the latter is exacerbated in low property rights regimes. In addition to identifying a specific channel through which legal protections affect incentives for innovation and R&D, our results support arguments in the literature that the enforcement of property rights affects firm investment and growth.

Suggested Citation

  • Fan, Joseph P.H. & Gillan, Stuart L. & Yu, Xin, 2013. "Innovation or imitation?," Journal of Multinational Financial Management, Elsevier, vol. 23(3), pages 208-234.
    • Handle: RePEc:eee:mulfin:v:23:y:2013:i:3:p:208-234
    DOI: 10.1016/j.mulfin.2013.03.001
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    Cited by:

    1. Jiang, Zhan & Kim, Kenneth A., 2013. "Financial management in China," Journal of Multinational Financial Management, Elsevier, vol. 23(3), pages 125-133.
    2. Fu, Tong & Jian, Ze, 2018. "Property rights protection, financial access and corporate R&D: Evidence from a large representative sample of Chinese firms," Economic Systems, Elsevier, vol. 42(2), pages 332-345.
    3. Shengjun Zhu & Canfei He & Xinming Xia, 2019. "Geography of productivity: evidence from China’s manufacturing industries," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 62(1), pages 141-168, February.
    4. Kelvin W. Willoughby, 2020. "Endogenous innovation, outward-bound international patenting and national economic development," The Journal of Technology Transfer, Springer, vol. 45(3), pages 844-869, June.
    5. Collins, Tracy, 2015. "Imitation: A catalyst for innovation and endogenous growth," Economic Modelling, Elsevier, vol. 51(C), pages 299-307.

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    More about this item

    Keywords

    Innovation; Imitation; Intellectual property rights;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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