Innovation Spillover Effect in Semiconductor Industry

Abstract

The contribution of external intellectual property development by other firms to firms' internal innovation and productivity improvement is defined as "spillover effect". While some criticize that the intellectual property right protections on patents hinder the spillover effect, others propose that the compulsory patent disclosure or patent licensing enforces innovation spillovers. This paper thus provides the empirical evidence of patent and R&D spillover effect on productivity to resolve the controversy. The findings support that the spillover effect derived from other companies' innovative activities can enhance firm process or product innovation, thereby improving firm performance. Since technology learning from intra-industry R&D activities or patent development is swiftly facilitated for IC firms involved either in process innovation or in product innovation. R&D spillover effects in these firms appear evidently stronger. In contrast, because the IC firms rely more on patent licensing to develop core technology innovation, the patent spillover effect even is obvious as well.