IDEAS home Printed from https://ideas.repec.org/a/eee/respol/v49y2020i5s0048733320300391.html
   My bibliography  Save this article

Counterfeiting in digital technologies: An empirical analysis of the economic performance and innovative activities of affected companies

Author

Listed:
  • Butticè, Vincenzo
  • Caviggioli, Federico
  • Franzoni, Chiara
  • Scellato, Giuseppe
  • Stryszowski, Piotr
  • Thumm, Nikolaus

Abstract

This study analyses empirically the effects of counterfeiting on the economic and innovation performance of firms, exploiting a novel and unique dataset that integrates information on custom seizures worldwide during years 2011–2013 with financial accounting data, patent and trademark data for a sample of digital technology companies. We apply diff-in-diff models using a large control sample of non-affected firms. Results provide robust evidence that counterfeiting is associated to a negative impact on operative margins of affected companies, relative to the control sample. The analysis does not find conclusive evidence on the effects of counterfeiting on the innovation activities of affected companies. We find no evidence in support of the hypothesis that counterfeiting could also exert an indirect positive effect on the sales of genuine goods.

Suggested Citation

  • Butticè, Vincenzo & Caviggioli, Federico & Franzoni, Chiara & Scellato, Giuseppe & Stryszowski, Piotr & Thumm, Nikolaus, 2020. "Counterfeiting in digital technologies: An empirical analysis of the economic performance and innovative activities of affected companies," Research Policy, Elsevier, vol. 49(5).
    • Handle: RePEc:eee:respol:v:49:y:2020:i:5:s0048733320300391
    DOI: 10.1016/j.respol.2020.103959
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0048733320300391
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.respol.2020.103959?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Rob, Rafael & Waldfogel, Joel, 2006. "Piracy on the High C's: Music Downloading, Sales Displacement, and Social Welfare in a Sample of College Students," Journal of Law and Economics, University of Chicago Press, vol. 49(1), pages 29-62, April.
    2. Stan Liebowitz, 2005. "Economists’ Topsy-Turvy View of Piracy," Law and Economics 0505002, University Library of Munich, Germany.
    3. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    4. Insaf Bekir & Sana El Harbi & Gilles Grolleau, 2013. "How a luxury monopolist might benefit from the aspirational utility effect of counterfeiting?," European Journal of Law and Economics, Springer, vol. 36(1), pages 169-182, August.
    5. Nordhaus, William D, 1969. "An Economic Theory of Technological Change," American Economic Review, American Economic Association, vol. 59(2), pages 18-28, May.
    6. Alan Zimmerman & Peggy Chaudhry, 2009. "The Economics of Counterfeit Trade," Springer Books, Springer, number 978-3-540-77835-6, December.
    7. Hobday, Michael & Rush, Howard & Bessant, John, 2004. "Approaching the innovation frontier in Korea: the transition phase to leadership," Research Policy, Elsevier, vol. 33(10), pages 1433-1457, December.
    8. Grossman, Gene M & Shapiro, Carl, 1988. "Counterfeit-Product Trade," American Economic Review, American Economic Association, vol. 78(1), pages 59-75, March.
    9. Lee Branstetter & Ray Fisman & C. Fritz Foley & Kamal Saggi, 2023. "Does intellectual property rights reform spur industrial development?," World Scientific Book Chapters, in: Kamal Saggi (ed.), Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy, chapter 13, pages 307-316, World Scientific Publishing Co. Pte. Ltd..
    10. Li, Ling, 2013. "Technology designed to combat fakes in the global supply chain," Business Horizons, Elsevier, vol. 56(2), pages 167-177.
    11. Yi Qian, 2008. "Impacts of Entry by Counterfeiters," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(4), pages 1577-1609.
    12. Nancy T. Gallini, 2002. "The Economics of Patents: Lessons from Recent U.S. Patent Reform," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 131-154, Spring.
    13. Feinberg, Robert M & Rousslang, Donald J, 1990. "The Economic Effects of Intellectual Property Right Infringements," The Journal of Business, University of Chicago Press, vol. 63(1), pages 79-90, January.
    14. Jeremy M Wilson & Brandon A Sullivan, 2016. "Brand owner approaches to assessing the risk of product counterfeiting," Journal of Brand Management, Palgrave Macmillan, vol. 23(3), pages 327-344, May.
    15. Yi Qian, 2014. "Brand Management and Strategies Against Counterfeits," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(2), pages 317-343, June.
    16. Takeyama, Lisa N, 1994. "The Welfare Implications of Unauthorized Reproduction of Intellectual Property in the Presence of Demand Network Externalities," Journal of Industrial Economics, Wiley Blackwell, vol. 42(2), pages 155-166, June.
    17. Kathleen Reavis Conner & Richard P. Rumelt, 1991. "Software Piracy: An Analysis of Protection Strategies," Management Science, INFORMS, vol. 37(2), pages 125-139, February.
    18. Berger, Florian & Blind, Knut & Cuntz, Alexander, 2012. "Risk factors and mechanisms of technology and insignia copying—A first empirical approach," Research Policy, Elsevier, vol. 41(2), pages 376-390.
    19. Fournier, Susan, 1998. "Consumers and Their Brands: Developing Relationship Theory in Consumer Research," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 24(4), pages 343-373, March.
    20. Yi Qian & Qiang Gong & Yuxin Chen, 2015. "Untangling Searchable and Experiential Quality Responses to Counterfeits," Marketing Science, INFORMS, vol. 34(4), pages 522-538, July.
    21. Peitz, Martin & Waelbroeck, Patrick, 2006. "Piracy of digital products: A critical review of the theoretical literature," Information Economics and Policy, Elsevier, vol. 18(4), pages 449-476, November.
    22. Yi Qian, 2014. "Counterfeiters: Foes or Friends? How Counterfeits Affect Sales by Product Quality Tier," Management Science, INFORMS, vol. 60(10), pages 2381-2400, October.
    23. Gene M. Grossman & Carl Shapiro, 1988. "Foreign Counterfeiting of Status Goods," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(1), pages 79-100.
    24. Wilke, Ricky & Zaichkowsky, Judith Lynne, 1999. "Brand imitation and its effects on innovation, competition, and brand equity," Business Horizons, Elsevier, vol. 42(6), pages 9-18.
    25. Albert G.Z. Hu & I.P.L. Png, 2013. "Patent rights and economic growth: evidence from cross-country panels of manufacturing industries," Oxford Economic Papers, Oxford University Press, vol. 65(3), pages 675-698, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bradley, Wendy A. & Kolev, Julian, 2023. "How does digital piracy affect innovation? Evidence from software firms," Research Policy, Elsevier, vol. 52(3).
    2. Pittiglio, Rosanna, 2024. "Counterfeiting and firm survival. Evidence from the Italian manufacturing industry," Economic Systems, Elsevier, vol. 48(2).
    3. Yang Yu & Fangrong Ren & Yun Ju & Jingyi Zhang & Xiaoyan Liu, 2024. "Exploring the Role of Digital Transformation and Breakthrough Innovation in Enhanced Performance of Energy Enterprises: Fresh Evidence for Achieving Sustainable Development Goals," Sustainability, MDPI, vol. 16(2), pages 1-22, January.
    4. Ching, Kenny & Forti, Enrico & Katsampes, Spyridon & Mammous, Kostantinos, 2024. "Style and quality: Aesthetic innovation strategy under weak appropriability," Research Policy, Elsevier, vol. 53(3).
    5. Thomä, Jörg & Bischoff, Thore S., 2022. "From automation to databased business models - digitalization and its links to innovation in small and medium-sized enterprises," ifh Working Papers 31/2022, Volkswirtschaftliches Institut für Mittelstand und Handwerk an der Universität Göttingen (ifh), revised 2022.
    6. Yangjun Ren & Botang Li, 2022. "Digital Transformation, Green Technology Innovation and Enterprise Financial Performance: Empirical Evidence from the Textual Analysis of the Annual Reports of Listed Renewable Energy Enterprises in C," Sustainability, MDPI, vol. 15(1), pages 1-15, December.
    7. Pittiglio, Rosanna, 2023. "Counterfeiting and firm survival. Do international trade activities matter?," International Business Review, Elsevier, vol. 32(5).
    8. Yangjun Ren & Xin Zhang & Hui Chen, 2022. "The Impact of New Energy Enterprises’ Digital Transformation on Their Total Factor Productivity: Empirical Evidence from China," Sustainability, MDPI, vol. 14(21), pages 1-17, October.
    9. Chen, Jianqiang & Hsieh, Pei-Fang & Wang, Kun, 2023. "Cracking down on the infringement and counterfeiting: Intellectual property rights and corporate innovation in China," Finance Research Letters, Elsevier, vol. 55(PA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nikolaus Thumm & Vincenzo Butticè & Federico Caviggioli & Chiara Franzoni & Giuseppe, Scellato, 2018. "Impact of counterfeiting on the performance of digital technology companies," JRC Working Papers on Digital Economy 2018-03, Joint Research Centre.
    2. Chen, Jianqiang & Hsieh, Pei-Fang & Wang, Kun, 2023. "Cracking down on the infringement and counterfeiting: Intellectual property rights and corporate innovation in China," Finance Research Letters, Elsevier, vol. 55(PA).
    3. Yi Qian, 2014. "Counterfeiters: Foes or Friends? How Counterfeits Affect Sales by Product Quality Tier," Management Science, INFORMS, vol. 60(10), pages 2381-2400, October.
    4. Wu, Chien-Wei & Gong, Jyh-Chyi & Chiu, Hsien-Hung, 2016. "Duopoly competition with non-deceptive counterfeiters," International Review of Law and Economics, Elsevier, vol. 47(C), pages 33-40.
    5. Weiting Wang & Yi Liao & Wenjing Shen, 2023. "The Impact of Online Anti-Counterfeiting on Channel Structure and Pricing Decisions," Sustainability, MDPI, vol. 15(10), pages 1-26, May.
    6. Bradley, Wendy A. & Kolev, Julian, 2023. "How does digital piracy affect innovation? Evidence from software firms," Research Policy, Elsevier, vol. 52(3).
    7. Sun, Jiong & Zhang, Xing & Zhu, Qingyuan, 2020. "Counterfeiters in Online Marketplaces: Stealing Your Sales or Sharing Your Costs," Journal of Retailing, Elsevier, vol. 96(2), pages 189-202.
    8. Pittiglio, Rosanna, 2024. "Counterfeiting and firm survival. Evidence from the Italian manufacturing industry," Economic Systems, Elsevier, vol. 48(2).
    9. Zhang, Jie & Zhang, Rachel Q., 2015. "Supply chain structure in a market with deceptive counterfeits," European Journal of Operational Research, Elsevier, vol. 240(1), pages 84-97.
    10. Beqiraj, Elton & Fedeli, Silvia & Giuriato, Luisa, 2020. "Policy tolerance of economic crime? An empirical analysis of the effect of counterfeiting on Italian trade," European Journal of Political Economy, Elsevier, vol. 65(C).
    11. Francesco Rullani & Karin Beukel & Matteo De Angelis, 2021. "Anti‐counterfeiting strategy unfolded: A closer look to the case of a large multinational manufacturer," Strategic Management Journal, Wiley Blackwell, vol. 42(11), pages 2084-2103, November.
    12. Tin Cheuk Leung, 2013. "What Is the True Loss Due to Piracy? Evidence from Microsoft Office in Hong Kong," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 1018-1029, July.
    13. Yi Qian & Qiang Gong & Yuxin Chen, 2015. "Untangling Searchable and Experiential Quality Responses to Counterfeits," Marketing Science, INFORMS, vol. 34(4), pages 522-538, July.
    14. Chao, Hong & Ho, Chun-Yu & Leung, Tin Cheuk & Ng, Travis, 2017. "To root or not to root? The economics of jailbreak," Journal of Comparative Economics, Elsevier, vol. 45(3), pages 481-497.
    15. Bian, Junsong & Zhang, Guoqing & Zhou, Guanghui, 2023. "The strategic impact of vertical integration on non-deceptive counterfeiting," International Journal of Production Economics, Elsevier, vol. 260(C).
    16. Yuetao Gao, 2018. "On the Use of Overt Anti-Counterfeiting Technologies," Marketing Science, INFORMS, vol. 37(3), pages 403-424, May.
    17. Hu, Shu & Fu, Ke & Wu, Tong, 2021. "The role of consumer behavior and power structures in coping with shoddy goods," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 155(C).
    18. Ching, Kenny & Forti, Enrico & Katsampes, Spyridon & Mammous, Kostantinos, 2024. "Style and quality: Aesthetic innovation strategy under weak appropriability," Research Policy, Elsevier, vol. 53(3).
    19. Jonas Häckner & Astri Muren, 2015. "Counterfeiting and Negative Consumption Externalities – A Closer Look," Journal of Industry, Competition and Trade, Springer, vol. 15(4), pages 337-350, December.
    20. Gao, Sarah Yini & Lim, Wei Shi & Ye, Ziqiu, 2023. "Optimal channel strategy of luxury brands in the presence of online marketplace and copycats," European Journal of Operational Research, Elsevier, vol. 308(2), pages 709-721.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:respol:v:49:y:2020:i:5:s0048733320300391. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/respol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.