Defensive Disclosure under Antitrust Enforcement

We formulate a simple model of optimal defensive disclosure by a monopolist facing uncertain antitrust enforcement and test its implications using unique data on defensive disclosures and patents by IBM during 1955-1989. Our results indicate that stronger antitrust enforcement leads to more defensive disclosure, that quality inventions are disclosed defensively, and that defensive disclosure served as an alternative but less successful mechanism to patenting at IBM in appropriating returns from R&D

Product Customization and Firm Survival

This research investigates the impact of product customization activity on firm survival. Using unique data on laser and 12 related industries between 1997 and 2009, I examine whether, as the submarkets model of industry evolution suggests, firms that undertake product customization activity survive longer. The findings show that, while product customization does enhance firm survival, it does so through two distinct channels. First, as the submarkets model captures, product customization leads to better survival through developing new submarkets, which I call the pioneering effect. Second, product customization intensity at the submarket-level has a deterrent effect on entry, which is associated with an additional survival premium not captured in the submarkets model. The results are robust to alternative explanations such as survival premium from multimarket contact and mutual forbearance. According to one interpretation of the results greater exploratory search for submarkets by firms already present in the industry lowers subsequent entry into the industry. While prior research has modeled the within-firm tradeoff between exploration and exploitation, the results suggest that important industry- level dynamic, indirect effects may have been neglected. According to another interpretation of the results, such dynamic effects lower conformist and imitative entry

Defensive Disclosure of Patentable Inventions Under Antitrust Enforcement

We formulate a simple model of optimal defensive disclosure by a dominant firm facing uncertain antitrust enforcement and test its implications using unique data on defensive disclosures and patents by IBM. Our results indicate that stronger antitrust enforcement leads to more defensive disclosure and that defensive disclosure served as an alternative, but less successful, mechanism to patenting at IBM in appropriating returns from R&D. We extend our analysis to two other exceptionally large firms with defensive-disclosure activity, AT&T and Xerox, and show that their patenting propensity declined under increased antitrust enforcement relative to other firms in the industry. We further extend the case study of Xerox and using a differences-in-differences approach we show that patent propensity declined and patent scope increased in patent classes affected by the 1975 consent decree. Overall, we show how these firms used defensive disclosure as a strategy to balance the benefits of patenting with the costs of uncertain antitrust enforcement

First-Mover Advantages Before and After TRIPS

Scholars argue that the presence of persistent first-mover advantages obviates the need for relatively long-lived patents as incentives for innovations. What then is the impact of the strengthening of patent protection, particularly in developing economies, on non-patent-based first-mover advantages? We investigate this question by estimating the extent of erosion of first-mover advantages in the Indian pharmaceutical industry due to the introduction of a stronger product-patent regime in January 2005. We distinguish between newly created and pre-existing markets, in which the strength of product patent protection differs systematically. Our analyses account for the endogeneity of entry order. We find evidence of erosion—as high as 50-percent—that is robust to alternative estimation strategies and definitions of dependent variables. We extend the Suarez-Lanzolla framework and highlight the role of regulatory factors on the relationship between first-mover advantages and intellectual property rights. We conclude by discussing managerial and policy implications

Human Capital, Firm Capabilities, and Innovation

Are differences in inventor productivity due to differences in inventors’ skills or differences in the capabilities of the firms they work for? We analyze a 37-year panel that tracks the patenting of U.S. inventors and find strong evidence for serial correlation in inventors’ productivity. We apply an econometric technique developed by Abowd, Kramarz, and Margolis (1999) to decompose the contributions of inventors’ human capital and firm capabilities for productivity. Our estimates suggest human capital is 4-5 times more important than firm capabilities for explaining the variance in inventor productivity. High human capital inventors work for firms that have: (i) other high human capital inventors, (ii) superior financial performance, and (iii) weak firm-specific invention capabilities. On the margins, managers should emphasize selecting talent rather than training workers to enhance innovation performance

Human Capital, Firm Capabilities, and Innovation

Are differences in inventor productivity due to differences in inventors’ skills or differences in the capabilities of the firms they work for? We analyze a 37-year panel that tracks the patenting of U.S. inventors and find strong evidence for serial correlation in inventors’ productivity. We apply an econometric technique developed by Abowd, Kramarz, and Margolis (1999) to decompose the contributions of inventors’ human capital and firm capabilities for productivity. Our estimates suggest human capital is 4-5 times more important than firm capabilities for explaining the variance in inventor productivity. High human capital inventors work for firms that have (i) other high human capital inventors, (ii) superior financial performance, and (iii) weak firm-specific invention capabilities. On the margins, managers should emphasize selecting talent rather than training workers to enhance innovation performance

Representation and Annotation of Online Handwritten Data

Annotated datasets of handwriting are a prerequisite for the design and training of handwriting recognition algorithms. In this paper, we briefly describe an XML representation for annotation of online handwriting data that uses the emerging Digital Ink Markup Language (InkML) standard from W3C for the representation of handwriting data. We then describe a tool based on the proposed representation that can be used for annotation of digital ink. Ease and speed of annotation are emphasized in the design of the tool. Together, the representation and the tool attempt to address the requirements of creation of annotated datasets of handwritten data in different scripts around the worldwide. 1