In a new study, SMU strategy professors Julian Kolev and Wendy Bradley analyze the link between digital piracy and innovation in software technology firms. Their research finds that large incumbent firms like Microsoft and Adobe Systems increased innovation after disruptions to their business model occurred as a result of file-sharing technology that allowed their products to be more easily copied or pirated.
“If you expect your ideas and innovations to be pirated, you might not feel as motivated and incentivized to invest in those innovations,” Kolev says. “Our research findings see the opposite: there was an increase in innovative activity on a broad spectrum of measures, including research and development spending, patents, copyrights and trademarks.”
Their analysis used intellectual property and the development of improvements in product software to investigate the effects of piracy on innovation.