Template-Type: ReDIF-Paper 1.0
Author-Name: Sourav Bhattacharya
Author-Name-First: Sourav
Author-Name-Last: Bhattacharya
Author-Name: Pavel Chakraborty
Author-Name-First: Pavel
Author-Name-Last: Chakraborty
Author-Name: Chirantan Chatterjee
Author-Name-First: Chirantan
Author-Name-Last: Chatterjee
Title: Intellectual Property Regimes and Firm Structure
Abstract: We use The Patents (Amendment) Act, 2002 in India as a quasi-natural experiment to identify the causal e¤ect of higher incentives for innovation on firm organizational features. We find that stronger intellectual property (IP) protection has a sharper impact on technologically advanced firms, i.e., firms that were a-priori above the industry median in terms of technology adoption. While there is an overall increase in managers' share of compensation, this increase is about 1.6-1.7% more for high-tech firms. This difference can be attributed to a larger increase in performance pay for high-tech firms. The reform also leads to a significant increase in number of managerial layers and number of divisions for high-tech firms relative to low-tech firms, but only the latter effect is correlated with the differential change in managerial compensation. Broadly, we demonstrate that stronger IP protection leads to an increase in both within-firm and between-firm wage inequality, with more robust evidence for between-firm inequality.
Creation-Date: 2018
File-URL: http://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/economics/working-papers/LancasterWP2018_011.pdf
File-Format: application/pdf
Number: 240829812
Classification-JEL: D21, D23, L23, O01, O34
Keywords: Intellectual Property Regimes, High-tech and Low-tech firms, Managerial Com- pensation, Span of Control
Handle: RePEc:lan:wpaper:240829812