• knowledge;
  • innovation;
  • intellectual property rights;
  • supply relationships;
  • business services;
  • property rights theory


This empirical study of business-to-business service firms examines the determinants and effects of control rights to intellectual assets in a property rights theoretic framework. Regression analyses using survey data suggest that service suppliers that retain control over their intellectual output are more innovative. In long-term relationships, service firms' clients may thus be better off balancing their need to control outsourced activities with the suppliers' incentives to invest in learning and innovation. Additionally, and aligned with property rights theoretic predictions, service suppliers' bargaining power and their indispensability in service projects are positively associated with their ability to retain control rights. In contrast, innovation capabilities are not very significant in determining control rights allocation between service suppliers and their clients. Copyright © 2008 John Wiley & Sons, Ltd.