Coopetition and Product Innovation: the Role of Intellectual Property Protection

We study how firms’ engagement in collaboration with competitors (coopetition) affects their innovation outcomes and investigates the role of protection of intellectual property (IP) within this relationship. As prior research provides mixed results, we consider product innovation in general, and distinguish between new-to-the- firm (incremental) and new-to-the-market (radical) innovation. Moreover, we differentiate between formal IP protection mechanisms (patents, industrial designs, trademarks, copyrights) and informal ones (secrecy, complexity, lead-time). Using an ordinary least squares (OLS) approach, we analyze three samples (one per type of innovation). Each sample consists of around 7,500 German innovating firms from various industries over the years 2001, 2005, 2011 and 2013. The findings reveal that coopetition is beneficial for innovation in general and incremental innovation, while it does not directly affect radical innovation. Moreover, we find that coopetitors aiming at innovation in general or radical innovation benefit from making use of formal IP. Informal mechanisms on the other hand negatively impact those innovation outcomes. Coopetition for incremental innovation does not seem to require any IP protection. This study contributes to extant literature by advancing our understanding of the notion of coopetition and its meaning for firms’ innovation.