The Interaction between Competition, Collaboration and Innovation in Knowledge Industries

The three studies in this dissertation examine the relationship between the decision of market participants to compete or collaborate on their innovation strategies and outcomes as well as the broader industry structure and technological progress. The first study analyzes the impact of modern patent pools on the innovative performance of firms outside the pool. Theories generally predict that modern patent pools have a positive impact on innovation by reducing the cost of access to the pool’s technology, but recent empirical research suggests that patent pools may actually decrease the innovation rate of firms outside the pool. Using a difference-in-difference-with-matching methodology, I find a substantial decline in outsiders’ patenting rate after the pool formation. However I find that the observed reduction is mainly due to a shift in firms’ investment from additional patentable technological exploration toward implementing the pool technology in their products. The results shed light on how the interaction between cooperation, in the form of patent pooling, and competition shapes firms’ innovative strategies by enabling opportunities for application development based on the pooled technologies. In the second study, I examine the impact of restrictive stem cell policies introduced by George W. Bush in 2001 on the U.S. scientists’ productivity and collaboration patterns. Employing a difference-in-differences methodology, I find that the 2001 Bush policy led to a decline in the research productivity of U.S. scientists. However, the effect was short-lived as U.S. scientists accessed non-federal funds within the United States and sought funds outside the United States through their international ties. The results suggest that scientists may use international collaborations as a strategic means to deal with uncertainties in their national policy environment. In the third study, I examine the effects of the fragmentation of patent rights on subsequent investment in new inventions. Using a theoretical model and an empirical analysis of the semiconductor industry, I seek to shed light on the contingency factors that shape the role of technological fragmentation in explaining the investment decisions and appropriation strategies of firms. The results provide a dynamic explanation of the interplay between firms’ R&D investment, their patenting strategies, and technological fragmentation.Ph