Harabi, Najib (1991): Innovation versus Imitation: Empirical Evidence from Swiss Firms. Published in: WWW-Arbeitspapiere No. No. 15 : pp. 1-26.
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Abstract
The underlying theoretical assumption of this paper is that if firms can imitate an innovation at a cost that is substantially below the cost of the innovator to carry out the innovation, there may be little or no incentive to carry out the innovation. Cost and time required for imitating new products and processes have an important effect on the incentives for innovation in a market economy.
The purpose of this paper is to investigate empirically, first the number of firms capable of duplicating several categories of innovations, secondly the typical level of cost, thirdly the typical amount of time it would take to duplicate innovations if they were developed by a competitor, and finally the relationship between those factors and patents. The findings are based on a survey I conducted among 358 firms in 127 (SIC-four-digit classification) industries in Switzerland in 1988.
The results can be summarized as follows:
- The median estimated number of firms capable of duplicating a major process and product innovation is three per relevant market (mostly the international market, since the Swiss economy is very open). The corresponding figures for typical process innovations is five and for typical product innovations is six. In other words, there is a surprisingly small number of serious rivals for each firm and furthermore, there are almost twice as many firms capable of duplicating typical innovations as those capable of duplicating major innovations.
- The median estimated ratio of imitation cost to innovation cost is about 80% for major patented, 50% for major unpatented, 70% for typical patented, and 40% for typical unpatented innovations. Thus, it is less expensive for a firm to duplicate any category of innovation developed by a competitor than to carry it out itself.
- The estimated median of the time length required for duplicating major patented (process and product) innovations is about two years, for typical, patented innovations is about 18 months, for major unpatented innovations is about 16 months, and for typical unpatented innovations, is about ten months. Since there is a significant correlation between cost and time of imitation, the conclusions are the same as under point 2). - Patents tend, on average, to increase the cost and time required for duplicating an innovation.
Item Type: | MPRA Paper |
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Original Title: | Innovation versus Imitation: Empirical Evidence from Swiss Firms |
Language: | English |
Keywords: | Innovation, Innovation costs, Imitation, Imitation costs, Imitation time |
Subjects: | O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D |
Item ID: | 26214 |
Depositing User: | Najib Harabi |
Date Deposited: | 03 Nov 2010 13:12 |
Last Modified: | 30 Sep 2019 18:50 |
References: | Arrow, K., 1962, "Economic Welfare and the Allocation of Resources for Invention" in National Bureau of Economic Research, The Rate and Direction of Inventive Activity, New York. Harabi, N., 1990, "Einflussfaktoren von Forschung und Entwicklung in der Schweizer Industrie - Ergebnisse einer schriftlichen Expertenbefragung" - Arbeitspapier Nr.1 3, Wirtschaftswissenschaftliches Institut der Universität Zurich. Levin, R., Kievorick, K., Nelson, R., Winter, S., 1987, "Appropriating the Returns from Industrial Research and Development", Brookings Papers on Economic Activity, Special Issue on Microeconomics, pp.783-821. Mansfield, E., 1985, "How Rapidly Does New Industrial Technology Leak Out?", Journal of Industrial Economics, Vol. 34(December 1985), pp.217-224. Mansfield, E., Schwartz, M. and Wagner,S., 1981, "Imitation Costs and patents: An Empirical Study", Economic Journal, 91 December), pp 907-918. Mansfield, E., 1961, Technical Change and the rate of Imitation,Econometrica, Vol. 19, 741-66. Mansfield, E.,1968, Industrial Research and Technological Innovation,New York: W W. Norton. Taylor and Silberston, 1973, The Economic Impact of the Patent System, New York: Cambridge University Press. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/26214 |