Protecting innovation through patents and trade secrets: Determinants and performance impacts for firms with a single innovation

Dirk Crass, Francisco Garcia Valero, Francesco Pitton and Christian Rammer

No 16-061, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: This paper tests a number of hypotheses on the use and effectiveness of patents and trade secrets designed to protect innovation. While previous studies have often considered patents and trade secrets as substitutes for one another, we investigate the complementary role of the two protection methods. We identify protection strategies for single innovation firms and hence overcome the assignment problem of existing empirical studies, i.e. whether firms using both protection methods do so for the same innovation or for different innovations. Employing firm panel data from Germany, we find fairly few differences between the determinants for choosing secrecy and patenting. Single innovators that combine both strategies, 39% of the group, tend to aim at a higher level of innovation and act in a more uncertain technological environment. Firms combining both protection methods yield significantly higher sales with new-to-market innovations. Using only secrecy has slightly stronger positive impacts on firm profitability.

Keywords: Patents; Trade Secrets; Performance Impacts; Single Innovation (search for similar items in EconPapers)
JEL-codes: O31 O32 O34 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-bec, nep-cse, nep-ino, nep-ipr, nep-law, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:16061

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