Cournot Seminar – Laura Magazzini (Sant’Anna SAS)

The role of appropriability conditions, such as intellectual property rights (IPR) protection, as “Schumpeterian” incentive to innovation has been largely explored in the empirical literature. In this paper, we explore the role of appropriability conditions on firm labor productivity under different configurations of R&D activities in highly globalized companies. In line with the literature, we show that labor, capital and R&D investments lead to productivity gains, and that the strength of the patent system the firm is embedded into is positively linked to the firm’s labor productivity too. We call this the bright side of IPR. However, stronger IPR might have a detrimental effect on the R&D returns, which appear to be maximized around the median level of IPR protection. In other words, too much protection might actually reduce R&D returns. Then, we call this the dark side of IPR. This is one of the first papers highlighting such dichotomy on a purpose-built high-quality database of globalized firms, which tend to be the most innovative firms in the world.