This document examines the effects of the Intellectual Property Rights (IPR) on business innovation in accordance with the factors associated with innovation. Based on the World Bank’s Enterprise Survey (ES) for 2010 and 2017, innovation is described in the classification of the Oslo Manual and in the IPRs according to the agreements related to intellectual property. In this paper, we estimated a probit model in order to analyze the effects of the IPRs on the innovation in Colombia; resulting on a positive and close to 10% effect of IPRs on the different types of innovation, except for innovations in progress. The effect of patents on innovations is, in all cases, positive and significant. Finally, in order to deal with selection bias problems and as an additional method, we used the propensity score matching method, with a treatment group corresponding to firms that have patents or any type of intellectual property registration. The sample comprises a total of 1935 firms. The results of the effects are positive, especially for firms that have patents or intellectual property registrations established seven years ago. In conclusion, the evidence rejects Arrow's hypothesis in the case of Colombia, in the sense that firms that already have monopoly power generated by IPRs continue to innovate over time.
