The Role of Trademarks and Patents in the Long term Evolution of Firm Performance in Korea

Abstract

This dissertation examines the effect of trademarks and patents on firms performance from the point of view of sectoral difference from the knowledge base. Korean IPR system was activated in 1946 and progressed for 70 years, it is possible to perform long-term analysis on IPRs at each development level. We described the development of the Korean IPR system and why we focus on trademarks as the measurement of economic development. We find that all sectors can be classified into two groups, the trademark-dominant group and the patent-dominant group. We began this study with the question of why some firms in some sectors apply for trademarks more than other IPRs, while other firms in other sectors change their main IPR to the patent or utility model. To investigate what makes the difference between the two groups, we examine different features of different sectors knowledge bases, including explicitness/tacitness. With sector-level data as well as sector-firm combined data, the empirical results reveal that the trademark-dominant sector has a negative relation with explicitness. Another finding of the sector-level analysis with export ratio is that the sectors in the trademark-dominant group are less relevant to technology than patent-dominant group. Also, we focus on different effects of trademarks and patents on firm performance in each group and period. Concentrating on technology accumulation through OEM and firm conversion to OBM, this study compares each periods performance in the trademark-dominant group and patent-dominant group. From the empirical results, we find that trademark registrations of firms in the trademark-dominant group have a positive effect on performance even in the underdevelopment stage. With this result we can infer that through imitative innovation (non-technological development), latecomer firms in the underdeveloped stage make progress and catch up to the incumbent firms in the trademark-dominant group. Meanwhile, firm performance in the patent-dominant group is related to trademark registration only in period 3. We also find a dynamic effect of patents and trademarks in the patent-dominant group, where trademarks and patents show an interaction effect in the developing stage. This mean that it is more effective for firms to manage trademarks and patents together when they decide to enter into OBM. With this analysis of the development of Korean IPRs, it would be possible to provide a desirable IPR strategy for other developing countries.