Munich Personal RePEc Archive

Appropriability of Technical Innovations: An Empirical Analysis

Harabi, Najib (1994): Appropriability of Technical Innovations: An Empirical Analysis. Published in: WWI-Arbeitspapiere, Reihe D No. Nr. 32 : pp. 1-18.

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Abstract

Appropriating the economic returns from technical innovations is very important for individual inventors and innovators, as well as for technical change in individual markets and for the whole economy. Since appropriability is difficult to measure directly, many researchers have been trying to investigate it indirectly and qualitatively by examining the effectiveness of various means of appropriability. The most important of these means are patents, secrecy and lead time and related advantages.

The purpose of this paper is to investigate empirically the effectiveness of different means of protecting the competitive advantages of technical innovations in Switzerland. The analysis is based on a survey conducted in 1988 among 358 Swiss experts, mainly R&D executives from selected firms. They represented 127 different lines of business, mainly in the manufacturing sector. The results can be summarized as follows:

1. For process innovations lead time is generally considered as the most effective means of appropnability. For product innovations superior sales and service efforts are viewed as the most effective means, followed by lead time.

2. For both product and process innovations patents are generally considered to be the least effective means of appropriability.

3. Patents as a means of appropnability in the Swiss context are only effective in a few industries: in chemicals, including drugs, and in some cases in the machinery and electrotechnics industries.

4. The ability of competitors to "invent around" patented innovations and the perception that patent documents require "disclosure of too much information" are considered as the most important constraints on the effectiveness of patents.

5. Inventors and innovators have manifold reasons for patenting their new ideas. Although patents may not provide adequate protection against imitation, they can contribute to enhancing the patent-holders' negotiating position towards third parties. This can be the case in negotiations either with other firms (for example about R&D-related agreements, fusions, take-overs etc) or with governmental agencies (for example concerning access to foreign markets).

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