Title

Design versus utility innovation: Is corruption sanding or greasing the wheels of innovation?

Document Type

Article

Publication Date

2020

Department/School

Economics

Publication Title

Managerial and Decision Economics

Abstract

© 2020 John Wiley & Sons, Ltd. This paper studies whether corruption has a greasing or a sanding effect on the production of innovation. The main novelty lies in comparing the relative impacts on design versus utility innovation. On the one hand, corruption can undermine (sand) the expected returns from patents, whereas on the other hand, patent holders might be able to increase (grease) the scope and applicability of their patents. Using U.S. state-level data and controlling for bidirectional causality, results show the sanding effect of corruption with regard to utility patents, with the negative effect on design patents occurring only with a time lag.

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