Do firms patent to protect or transfer knowledge in support of their innovations ?

This paper examines the role of patents in relation to the transfer and exchange of knowledge for corporate innovation. Studies on patents have mostly focused on the role of patents as an incentive for the creation of knowledge by offering a way to appropriate returns from innovation investments. However, an explanation for the relevance of patents for firms may be broader than reducing the possibility of copying their innovations. More recently it has been argued that patents may be considered a strategic asset used by a firm to signal its strengths, provide access to its own technology as well as obtain access to the technology of others. This would suggest that patents play an important role in promoting the transfer and exchange of knowledge. In this paper we investigate whether the use of patents to protect innovations and to participate in knowledge exchanges are complementary or substituting strategic activities of firms in their management of innovation. To investigate this, we utilise a comprehensive large-scale survey into firms innovation related activities, the fourth UK Community Innovation Survey. We use regression methods to examine the role of patents for knowledge transfer and exchange; and the impact of patenting, knowledge exchange and the interactions between patenting and knowledge transfer on firms’ innovation performance. Our findings suggest that firms that use patents have a higher propensity to exchange knowledge. Both, patenting and knowledge exchange is positively associated with innovation performance; however, we find only partial evidence for additional effects deriving from a combination of these two strategies.