The legal environment of side project ownership and IT innovation: evidence from the Alcatel v. Brown Case
Wu,Xi Ren,Charlotte R. Pang,Min-Seok
Wu,Xi
Ren,Charlotte R.
Pang,Min-Seok
Abstract
Engaging in side projects outside of regular employment has become a growing trend among knowledge workers, particularly information technology (IT) professionals. Side projects offer valuable opportunities for employees to learn new skills and foster creativity. However, the legal ownership of side projects remains uncertain, raising questions about how this affects employee innovation at their primary jobs, which we refer to as “employee innovation at work.” In this study, we leverage an exogenous change in the legal arrangement of side project ownership—the Alcatel v. Brown case—to investigate how firms’ enhanced control over side projects influences employees’ innovation performance at work. We find that in states where firms gained greater contractual authority to claim ownership of employees’ side projects, the number of IT patents owned by firms decreased. However, paradoxically, the quality of these patents, as measured by the number of forward citations, improved following the legal change. Further analyses of the underlying mechanisms suggest that these contrasting findings likely stem from shifts in both employee innovation behaviors and firms’ innovation strategies, post-Alcatel v. Brown. Our findings contribute to the information systems literature by highlighting the nuanced effects of side project ownership on IT innovation.
Description
Date
2025-09-28
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Research Projects
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Keywords
employee innovation at work, side project, IT innovation, intellectual property, alcatel v. brown
Citation
Wu, X, Ren, C R & Pang, M-S 2025, 'The legal environment of side project ownership and IT innovation: evidence from the Alcatel v. Brown Case', MIS Quarterly. https://doi.org/10.25300/misq/2025/18022