The obsolescence of patent proxies as country and firm innovation measures

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Southern New Hampshire University
Strategic practitioners and business scholars continuously analyze and study competitive advantage through innovation, seeking measurements that provide evidence of cause and effect. As a policy matter and academic matter, the impact of intellectual property rights on innovation is still debated. Despite the argument from authority via some bureaus, institutions and vested interests, who do emphasize some empirical studies, the matter remains unsettled. This would appear perplexing considering the volumes of scholarship surrounding this topic. This dissertation encourages a stepping back and, via refreshed considerations of classical and contemporary international business literature, a baselining of the analysis. A means to balance the holistic with the detailed is necessary; innovation proxies, such as R&D spending or patent activity, are suspect given the fluid nature of innovation. Offering an enhancement to the value chain paradigm, a means to assess innovation as comparative advantage demands respect to the holistic activities of firms and country institutions. Property rights are often employed to show economic growth and innovation; however, property rights require parsing to determine if physical property rights alone are an impetus to innovation without reliance on intellectual property rights. The usage of patent as innovation proxy is challenged in this thesis. Thus, the argument is constructed by viewing multiple, theoretical drivers that effect the firm as well as country-specific institutions. The results indicate that patent protection is not correlated with macro-level views of innovation, and it is not an appropriate proxy for innovation unless confined in the narrowest of scenarios. (Author abstract)