Why productivity and resilience matter now
Intensifying global competition has sharpened policy interest in how to lift productivity growth and encourage more dynamism in the economy. In this context, resilience is not a separate objective from productivity or competition. Rather, it reflects the capacity of firms to adapt, reallocate resources and sustain innovation in the face of uncertainty.
IP plays a critical role in this process. Beyond its traditional legal function, IP can shape how firms invest, scale and compete – particularly at moments when uncertainty would otherwise delay or deter productive activity. Through its impact on a firm’s ability to secure investment and grow, IP reinforces the flow of productive resources to the highest quality firms, which strengthens the economy over the long run.
How IP supports resilience
A growing body of research highlights that uncertainty does not uniformly discourage innovation. Rather, outcomes depend on whether firms can manage downside risk while retaining flexibility.
Patents are increasingly understood as real options: assets that allow firms to stage, delay or redirect investment decisions. Where patents can be licensed, traded or used to attract investment, they provide firms in volatile conditions with options to later recoup returns from investing in innovation.
Reflecting this idea, Park et al. (2025) found that US patenting increased during the COVID-19 recession. This was mainly in sectors with secondary markets for patents, where firms would later be able to recoup their R&D investments by selling or licensing their IP.1
More recently, Tao et al. (2025) showed that as trade tensions between the US and China escalated, Chinese firms increased their US patenting in strategic industries where they were restricted from operating. Rather than reducing their patents to avoid sunk costs, Chinese firms appear to have patented as a means to preserve future market access.2
Trade marks operate in a complementary way. They protect customer relationships and goodwill that firms have accrued under their brands. In this way, trade marks can help stabilise demand, support differentiation and facilitate entry into new markets. Research shows that firms with trade marks often perform better in the face of trade shocks such as sudden increases in foreign competition3 or tariff shifts.4
These results suggest that IP can support both productive risk-taking and firm resilience in periods of economic instability and change.
New evidence from Australian firms: event study analysis
IP Australia has undertaken new analysis on how firms perform in the lead up to and after receiving their first patent or trade mark. These moments often coincide with important transitions – from experimenting and developing new products, to commercialising ideas and positioning in the market. First filings are also of interest because they are likely to be associated with commercially significant inventions or products.5
Event study design captures dynamic change not just static differences
The analysis uses a modern event study framework.6 It compares firms before and after they receive their first grant and compares them with peers that have not yet received the same right (or which will never receive a right). The peers used for comparison are similar to the focal firms across a range of key attributes – age, size, R&D intensity, financial performance (Return on Assets) and leverage (total liability relative to total assets).
Because firms make the decision whether or not to seek IP rights, the results suggest dynamic associations, not definitive causal effects. Firms expecting growth may have stronger incentives to invest in IP, as fixed costs can be spread across expanding sales.
That said, the study design helps distinguish continuation of earlier trends from shifts that emerge after IP engagement.
Linked microdata provides economy-wide coverage of firm performance
The analysis draws on linked administrative data covering 2014 to 2023 from the Intellectual Property Longitudinal Research Database (IPLORD) and the Australian Bureau of Statistics (ABS) Business Longitudinal Analysis Data Environment (BLADE).
By linking IP records to business income tax data, the dataset captures close to the full population of active firms in Australia. It enables measurement of:
- total income (sales in dollar terms)
- labour productivity (output per full-time equivalent worker)
- total factor productivity (TFP), which captures efficiency after accounting for labour, capital and intermediate inputs.
The distinction matters. Labour productivity reflects output per worker and scaling efficiency. TFP reflects deeper technological or organisational improvements. Differences between them provide insight into the different economic functions of different IP rights.
Following a first patent grant, a firm’s total income is on average approximately 43% higher than that of the peer firms used for comparison.
Event study estimates show:
- relatively stable and modest pre-grant differences
- steady post-grant increases
- effects rising from around 10% in the first post-grant year to approximately 68% in later years.
The absence of sharply accelerating pre-trends strengthens confidence that the post-grant trajectory reflects more than simple continuation of earlier growth. The gradual build-up post-grant is consistent with lags in commercialisation and scaling.
Patents are associated with sustained efficiency gains and income growth
Income expands progressively following first patent grant
Following a first patent grant, a firm’s total income is on average approximately 43% higher than that of the peer firms used for comparison.
Event study estimates show:
- relatively stable and modest pre-grant differences
- steady post-grant increases
- effects rising from around 10% in the first post-grant year to approximately 68% in later years.
The absence of sharply accelerating pre-trends strengthens confidence that the post-grant trajectory reflects more than simple continuation of earlier growth. The gradual build-up post-grant is consistent with lags in commercialisation and scaling.
Patents are linked to improvements in total factor productivity
Patent grants are associated with:
- an average 14.6% increase in TFP
- an average 3% increase in labour productivity
Pre-grant productivity estimates fluctuate around zero, with no systematic upward trend. After the patent is granted, effects become consistently positive.
Based on these results, patent engagement is associated with deeper improvements in production efficiency and technological capability, rather than merely firm scaling.
Effects are strongest in IP-intensive industries
Effects are most pronounced in IP-intensive sectors:
- TFP gains are strongest in manufacturing, wholesale trade, retail trade, and professional, scientific and technical services.
- Labour productivity gains are more visible in retail trade, transport, postal and warehousing, and finance and insurance services.
These patterns suggest that patents impact through different channels across industries – sometimes by boosting a firm's technical efficiency through the implementation of new technologies, sometimes by supporting the firm to scale.
Trade marks are associated with revenue expansion and labour productivity gains
First trade mark registration coincides with strong income growth
For firms receiving a first trade mark registration, total income is on average approximately 78% higher than the peer firms used for comparison.
Pre-grant income differences fluctuate between 5% and 14%, without sustained acceleration. Following registration:
- income rises steadily over 6 years
- the effect peaks at approximately 82% in the sixth year after grant
- effects moderate slightly thereafter.
From year 6 after the grant, the income effect begins to decline. Trade marks appear to generate medium-term income gains rather than persistent long-run effects. This may reflect market saturation or the expiration of shorter-term competitive advantages.
Trade marks are linked to labour productivity rather than technical efficiency
Trade mark registration is associated with:
- an average 6% increase in TFP
- an average 16% increase in labour productivity.
TFP effects remain relatively stable before and after registration, suggesting limited shifts in frontier efficiency. In contrast, labour productivity rises steadily, with treated firms exhibiting 10% to 26% higher labour productivity over time.
These results make intuitive sense. Trade marks are more closely linked to revenue growth, by strengthening a firm’s market position, rather than to deep technological change. As brand value accumulates over time, a firm may scale in a way that allows for more organisational efficiency resulting in labour productivity gains.
What the evidence suggests about IP and productivity
Across both rights:
- statistically significant increases in income and productivity are observed following first IP engagement
- effects persist beyond the immediate post-grant period
- impacts are associated with pivotal transition points – usually in the early life of a firm
- effects are concentrated in IP-intensive industries.
Selection effects are likely present: firms on stronger growth paths may be more likely to invest in IP. The analysis does not claim pure causality. However, the absence of sharp pre-grant acceleration, combined with sustained post-grant shifts, suggests that IP engagement coincides with economically meaningful transitions, and is reinforcing the flow of resources to firms with high growth potential.
Taken together, the findings reinforce 3 broader themes of this report:
- Productivity: Patents are associated with sustained improvements in efficiency and technological capability. Trade marks are associated with strong labour productivity gains linked to scaling and market penetration.
- Competition: IP participation appears associated with firm entry and growth, rather than simply reduced contestability.
- Resilience: Though differences are observed across rights and industries, outcomes associated with IP appear to persist over time.
These findings cast IP as part of the economic infrastructure that supports firm growth, competitive dynamism and resource reallocation to high value firms.
Endnotes
- W Park, G Torres, A Toole and R Hughes, ‘Real options in patenting: Uncertainty and secondary patent markets’, USPTO Economic Working Paper 2025-2, 2025.
- T Bai, ‘Keeping a foot in the door: Chinese firms’ US patenting strategies amidst US-China geopolitical tensions’, Working paper, forthcoming.
- E Dinlersov, N Goldschlag, M Yorukoglu and N Zolas, ‘On the role of trade marks: From micro evidence to macro outcomes’, Center for Economic Studies working paper, US Census Bureau, 2023.
- M Falk, ‘Exporter responses to shocks: The role of trade marks’, IP Australia Economic Research Paper Series 11, 2021.
- P Kline, N Petkova, H Williams and O Zidar, ‘Who profits from patents? Rent-sharing at innovative firms’, The Quarterly Journal of Economics, 2019, (134:3), 1343–1404.