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What do firms gain from patenting? The case of the global ICT industry

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  • Exadaktylos, Dimitrios
  • Ghodsi, Mahdi
  • Rungi, Armando

Abstract

This study investigates the causal relationship between patent grants and firms’ dynamics in the global Information and Communication Technology (ICT) industry, as the latter is a peculiar sector of modern economies, often under the lens of antitrust authorities. We exploit matched financial accounts and patent grants in 2009–2017 by 179,660 companies in 39 countries. Preliminarily, we find that less than 2% of larger firms are responsible for 89% of the grants. We propose a quasi-experimental strategy that first controls for reverse causality and then separates the impact of IPR protection from the innovative content of inventions making use of exogenous variation at the patent offices. We find that patents have a considerable impact on market shares and the size of smaller companies (31.7% and 30.7%, respectively) in the first year after the grants, which is mainly due to IPR protection. Most of the bigger firms’ gains fade away after controlling for reverse causality and endogeneity. Notably, we never observe a direct impact on profitability for any firm size category. Eventually, we argue that IPR reform proposals should consider firms’ heterogeneity and improve IPR access for smaller companies to enhance competition.

Suggested Citation

  • Exadaktylos, Dimitrios & Ghodsi, Mahdi & Rungi, Armando, 2024. "What do firms gain from patenting? The case of the global ICT industry," Technological Forecasting and Social Change, Elsevier, vol. 208(C).
  • Handle: RePEc:eee:tefoso:v:208:y:2024:i:c:s0040162524005390
    DOI: 10.1016/j.techfore.2024.123741
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    More about this item

    Keywords

    Intellectual property rights; ICT; Market competition; SME;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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