Information asymmetry and the inefficiency of informal ip strategies within employment relationships

Runhua Wang

Technological Forecasting and Social Change, 2021, vol. 162, issue C

Abstract: Employee mobility and betrayal increase the risks of disclosing unpublished technical information. This study builds a theoretical foundation for the loss of unpublished technical information regarding human capital. It analyzes the inefficiency of informal intellectual property (“IP”) strategies, which include non-disclosure agreements (“NDAs”), covenants not to compete (“CNCs”), and trade secrets, from the maximum probable loss approach. It bridges the legal literature and the economics literature by emphasizing and explaining the information asymmetries in employment relationships regarding the informal IP strategies. NDAs need to be supplemented by CNCs or trade secret law. Enforceable CNCs and trade secrets have a reward function, but trade secrets are more efficient in informal IP management and innovation. Beyond the legal risks imposed by informal IP, companies should actively improve employee loyalty and their security culture through employee management.

Keywords: Informal intellectual property; Information asymmetries; Unpublished technical information; Innovation; Intellectual property strategy (search for similar items in EconPapers)
JEL-codes: K12 O32 O34 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:162:y:2021:i:c:s0040162520311616

DOI: 10.1016/j.techfore.2020.120335

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