Articles

The Effects of Intellectual Property Capability of Regions on R&D Performance of Individual Firms

Young-hoon Kim

Abstract

This research observes, through empirical analysis, the effects of the intellectual property capability of regions on the R&D performance of individual firms, which in detail refers to the firms’ growth, profitability, innovativeness, and productivity in comparison with the industrial average. The Korean Institute of Intellectual Property’s 2015 Intellectual Property Capability Assessment of Regions and Korea Investor’s Service’s Database on Firms’ Financial Performance Index was used for the analysis. The IP capability of regions were categorized into IP input, infrastructure, activity, and performance. The findings can be summarized as follows. First, a firm’s (sales) growth rate was higher in regions with active IP and education services. Second, in terms of a firm’s profitability, the industry’s innovation (IP) system was found to be more influential than that of the region. Third, the ratio of R&D investment of firms to total sales was higher in regions with active IP input and excellent IP performance. However, IP performance was found to contribute to private R&D growth when both IP creation and commercialization were active. Fourth, the firm’s Total Factor Productivity growth was found to be highly correlated with the region’s IP system when the IP activities of both public and private sectors were active. Despite these results, considering the 16 administrative areas of Korea, none of the areas were found to be active in both public and private sector IP activities, obtain a good score in both IP creation and IP services, or have an active IP service market. This leads us to believe that a thorough reconsideration of the IP systems of the various regions is necessary.