El Marc Institucional Objectius i nivells de referència:

2.3.3 Triad Branch 3: Institutions

As the final leg in the research triad, Figure 4, Institutional Maturity attributes, as related to Innovation environments and rule of law, is shown below. This illustrates four stems for

identifying the maturity of country-specific institutions. They highlight the constructs that make a country institutionally mature, and will be ultimately used (in various forms) as input factors to the innovation test.

Political integrity is demonstrated by overall political transparency, a guard against corruption.

This attribute implies overall fairness, by way of equal protection and treatment before the law.

Oversight of the political process is key to the concept of fairness, with assurances that no advantage is provided; i.e. government is not choosing winners and losers. The Access factor indicates if sufficient avenues exist for redress requests as well as recognition that the political environment is open to criticism and improvement.

Hand in hand with Political Integrity is the Legal Framework, ensuring evenhandedness in the ability for parties to make and enforce contracts. The judiciary is at the core of the impartiality,

The Obsolescence of Patent Proxies as Country and Firm Innovation Measures Page 52 of 166 as is the openness of the judicial system. Institutional differences also cause strain among

countries. Relative to intellectual property, U.S. companies complain that they have suffered greatly from the lack of rigorous and enforceable intellectual property laws (Long, ed. 2000).

But as many firms in developing countries endeavor to catch up to the developing world’s technology capabilities through technology (Kuo, Lin and Peng, 2016), there exists the rationale for lack of urgency in formalizing intellectual property laws. The enforcement consistency shall be increasingly important under international trade agreements, such as TRIPS (Ostergard, 2000).

Network, access to knowledge resources, trial and error are important components for fulfilling a strategy of innovation. Tools and assets include the endogenous processes that facilitate

knowledge exchange and knowledge capture. The network is the physical and intangible infrastructure, which can include the transport systems and the human connections. Trial and error, assumed to be an R&D value, can apply to many parts of the firm, so long as it is managed and controlled. As an additional driver, strategists understand that not all failures result in waste.

The failures are also an innovative knowledge asset. Access to knowledge is at the core of this research; the patent environment is a part knowledge sharer and part knowledge inhibitor.

But what of the measures of IP protection? If there is a correlation to test, then metrics must be employed for the macro levels of innovation and the country levels of IP protection.

The absence of enforcement is a byproduct of corruption whereby some violations of legal guidelines are ignored, but corruption charges cannot be leveled if a country’s overall perspective and culture is not steeped in intellectual property mindsets.

The Obsolescence of Patent Proxies as Country and Firm Innovation Measures Page 53 of 166 Figure 4, Institutional Maturity attributes, as related to Innovation environments and rule of law

Enforcement is a necessary measuring component for intellectual property protection; the implicit criticality is embedded in the measurements of legal framework and legal maturity.

There is a different perspective between developed and developing economies regarding the criticality of intellectual property rights. These rights were codified in advanced economies whose firms have operated, prospered and adapted to this business expectation. Intellectual property is used as a lever.

According to Shinkle and Kriauciunas (2010), “Most developing countries have committed themselves, pursuant to recent treaties, to raising their standards of intellectual property protection within a grace period.’ The time frame for these intentions remains unclear, as the developing countries do not possess mature intellectual property rights tradition nor the legal frameworks for enforcement. This should not be an indictment of the developing work’s legal

The Obsolescence of Patent Proxies as Country and Firm Innovation Measures Page 54 of 166 structure; the culture of these countries (social and political) have not seen intellectual property as a significant concern nor an individual right under assault.

But institutions are also vehicles enhancing knowledge. They establish incentives and business practices that influence the competitive markets as well as provoke knowledge capture and information exchange (Hoekman, Maskus, & Saggi, 2005). The question that this prompts is whether the incentive is monopoly-based or competition-based. The policy making zeitgeist is the former, with full blown acceptance that the governmentally mandated IP framework is the inducement to innovation.

Taken together, institutional factors are key to determining productivity and innovation;

ultimately property ownership is upheld by the institutional framework and a transparent environment. But the legal codification of intellectual property is promoted more on utilitarian grounds rather than philosophical grounds. Thus, it follows that if IP protections do not advance innovation (the utilitarian objective) then why should they continue to exist? This is a political question of course. Nevertheless, to add credence to the argument that innovation depends on IP, one must ascertain whether IP is the difference maker in the institutional framework. One must consider if IP is an extraneous variable, impacting innovation dynamic in no significant manner beyond that which is impacted by physical property rights.