Comparative Empirical Analysis on Computer Software Piracy Behaviors between China and the United States: An Exploratory Study

ABSTRACT Using the data collected from several universities in China and the United States, which have drastically different piracy rates, economic development stages, income levels, and national cultures, this study aims to identify which demographic factors affect software piracy significantly. Totally, the dataset includes 600 valid responses. Multivariate data analysis, supported by Multivariate Analysis of Variance and Turkey's test, reveals that among various factors, country difference and gender most significantly influence software piracy. In addition, this study offers recommendations on how to curb software piracy effectively. Keywords: China, United States, empirical analysis, intellectual property rights, software piracy INTRODUCTION Software piracy, defined as the unauthorized use or illegal copying/distribution of copyrighted software without explicit permission from the copyright holder (BSA, 2012; Hinduza, 2008), threatens the long-term viability of the software industry by both discouraging development efforts and, more seriously, triggering international political disputes (Bagchi, Kirs, & Cerveny, 2006; Moores & Chang, 2006; Rawlinson & Luption, 2007). Specifically, software piracy strains the ability of technology companies to invest in new jobs and new technologies, harms local resellers and services firms, lowers government tax revenues, and increases the risk of cybercrime and security problems. The 2011 BSA/IDC Global Software Piracy Study projected that lowering software piracy by just 10 percent over four years would create nearly 500,000 new jobs and pump $140 billion into ailing economies. The piracy rate denotes the amount of software pirated as a percentage of the total software installed in each country (BSA, 2012; Mishra, Akman, & Yazici, 2006). Computer software is one of the most common examples of intellectual property and is granted an ownership right called Intellectual Property Right (IPR) as well as legal protection, including copyrights and patents. Copyrights protect forms of expression such as written material and artistic work; patents protect ideas used for industrial products or processes (Shim & Taylor, 1989). Computer software piracy, a significant segment of the larger digital piracy phenomenon (Holsapple, Iyengar, & Rao, 2008), violates IPR and is considered a criminal act under copyright law in both China and the United States. Software piracy sometimes occurs from a common misunderstanding about software purchases: When a person buys software, one does not purchase the actual software, but rather a license to use it. The license tells a purchaser how many times the software can be installed. If one makes more copies of the software than the license permits, then s/he commits piracy (BSA, 2012). The most commonly pirated types of software are operating systems and office, antivirus, and entertainment software (Hsu & Su, 2008). Software piracy has been a major concern for many advanced countries, especially for the United States, where approximately 75% of the world's packaged software is currently produced (Schrank, 2003). A dramatic worldwide increase in computer usage, rapid advancements in computer and data compression techniques, and the ever-improving/expanding broadband accessibility to the Internet have contributed to software piracy on a global scale. A recent study (BSA Global Software Piracy Study 2013) revealed that 43% of the software installed on PCs around the world was not properly licensed; the commercial value of those unlicensed installations (piracy) was $62.7 billion. The Asia-Pacific region showed the highest rate (62%) of unlicensed software use among all regions and accounted for $21 billion (over 33% of the worldwide commercial value loss) of financial loss. China's piracy rate was 74%, with the lost commercial value of $8.767 billion accounting for about 42% of the entire Asia-Pacific region's financial loss and 14% of the global loss. …