The dynamics of innovation modes: Appropriability Strategy and Innovation Performance

This study investigates how different innovation modes—STI (Science and Technology-based Innovation), DUI (Innovation based on learning-by-Doing, Using, and Interacting), and their combination—affect firms’ use of formal and informal intellectual property protection mechanisms (IPPM) and influence product innovation performance. Building on existing innovation and protection theory, we develop a set of hypotheses linking innovation modes to protection strategies and innovation outcomes. These hypotheses are tested using dynamic two-step econometric models based on panel data from the Uruguayan National Innovation Activities Survey (2010–2021). Results show that STI primarily encourages the adoption of formal IPPM and increases both the likelihood and novelty of innovation, whereas DUI promote informal IPPM with a more limited impact on innovation outcomes. The combination of STI and DUI modes tends to create coordination tensions that hinder innovation performance. The findings reveal that the relationship between innovation modes, protection strategies, and innovation outcomes is not universal but context-dependent. Moreover, the strategy adopted for intellectual property protection plays a crucial role in shaping how innovation modes translate into firm innovation performance. JEL: 032; 034; 036