Trademarks, Own Brand Manufacturing, and Firm Growth at Different Stages of Development in Korea

Abstract

This study attempts to verify the linkages between trademark registration and firm growth based on the different stages of development and two groups of sectors by using Korean firm data. Two different paths of firm growth in Korea are identified. In the trademark-dominant group, trademarks serve as a useful device for firm growth at the early stage of development, with technology at a low level, and then firms execute technological innovations to file more patents. In the patent-dominant group, utility models serve as a useful device for firm growth at the early stage of development, in which technology advancement is a prominent feature. Then, the sales growth of firms becomes positively associated with both patents and trademarks, the latter representing the effects of their brand power or the full transition to own brand manufacturing. Combined with the findings from the literature, this study finds that various types of intellectual property rights (IPRs) manifest differently for firms, from innovation to business growth, at different stages of economic development. A key lesson for catching-up economies is for conventional patents to not only consider the IPR type at the early stage of development in certain sectors but also take into account other IPRs, such as trademarks and utility models, to recognize and stimulate imitation and/or innovation. Innovation policy should be tailored not only toward the different stages of development and capabilities but also toward sectoral heterogeneity