Economics and Policy of Innovation
Article Summary
Ewald, Helen
Università degli studi di Trieste
Prof. Vittorio Alberto Torbianelli
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“To protect or not to protect?”
Modes of appropriability in the small enterprise sector
By Jörg Thomäa, Kilian Bizera, Göttingen, Institute of Small Business Economics at University
of Göttingen
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Content
• The German Economy
• The Role of Small and Medium Sized Enterprises (DeStatis)
• Innovation in Germany (BMBF)
• The Patent Regime in Germany (DPMA)
• Research Background
• Data and Empirical Analysis
• Additional Findings on the Four Modes of Appropriability
• Key Findings of the Article
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The German Economy
The Role of Small and Medium Enterprises
Source: Statistisches Bundesamt (DeStatis 2014), 08.03.2017
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The German Economy
The Role of Small and Medium Enterprises
Congruent with the sample used by the
authors: ”Accordingly, our sample contains
data on 1624 innovative small firms which
have between 5 and 49 employees.”
Source: Amtsblatt der Europäischen Union (2003), 08.03.2017
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The German Economy
Innovation in Germany
Businesses
Source: Bundesministerium für Bildung und Forschung (2016), 08.03.2017
https://www.bmbf.de/de/deutschland-als-standort-fuer-forschung-und-innovation-20162845.html
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The German Economy
The Patent Regime
Large companies hand in the most
patent applications (national
applications as of 2016)
Source: Deutsches Patent- und Markenamt (2016), 08.03.2017
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Content
• The German Economy
• Research Background
• Previous Key Findings
• Formal and Informal Protection Mechanisms
• Data and Empirical Analysis
• Additional Findings on the Four Modes of Appropriability
• Key Findings of the Article
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The Research Background
Previous Key Findings
• (Granstrand 1999): In theory, IPRs effective mechanism for resolving the appropriability problem of
knowledge
• However, small firms often refrain from using registered IPRs
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Researchers suggest multiple reasons:
(Leiponen and Byma 2009): SME disadvantaged by company size
(Noteboom 1994): Knowledge in small firms tends to be tacit which might not be codifiable
(Cohen 2000): Informal protection mechanisms, in most industries viewed as more effective
• (Kitching and Blackburn 1998, Leiponen and Byma 2009):
• Most SMEs prefer informal protection practices to IPR
• Found them familiar, cheaper, less time-consuming and more effective
• Concluded: policy attempts to remove barriers on IPR usage little impact on innovation by SMEs
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The Research Background
Formal vs. Informal Protection
Formal
Informal
• Granted as exclusive rights on intellectual
property for a certain period
• Efforts by innovators to protect
themselves against imitation
• Types:
• Types:
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Patents,
Utility model,
Industrial design,
Trademark
Copyright (etc.)
• Secrecy
• Complexity of design
• Lead time advantages
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Content
• The German Economy
• Research Background
• Data and Empirical Analysis
• Cluster Analysis Part
• The Four Modes of Appropriability
• Additional Findings on the Four Modes of Appropriability
• Key Findings of the Article
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The Research Background
The Cluster Analysis Part I
• Empirical analysis rests on data provided by German Innovation Survey
• Constituted German part of fourth EU wide community innovation survey (reference period
2002-2004)
• Innovative company: If they had introduced/ were working on product/ process innovations
• Sample size: 1642 innovative small firms with 5-49 employees
• Cluster analysis to examine whether small firms form distinctive groups with respect to their
overall appropriation strategy
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The Research Background
The Cluster Analysis Part II
1251
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The Research Background
The Four Modes of Appropriability I
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The Research Background
The Four Modes of Appropriability II
1. Informal Protection Group
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Highest scores in all three informal protection methods
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IPRs no relevance
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maintaining lead time advantage was most important
2. Patent Oriented Group
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Technical IPRs important for protection of innovation results
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Trademarks are also relevant
3. Copyright Oriented Group
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Copyright protection as important protection mechanism for these innovators
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Also: Trademark and industrial design
4. Non-Protective Group
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Most innovative small firms
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Made no conscious effort to protect their innovation during reference period
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Seemingly face lower risk of imitation or other factors are responsible
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Content
• The German Economy
• Research Background
• Data and Empirical Analysis
• Additional Findings on the Four Modes of Appropriability
• Cluster Analysis with more Variables
• Key Findings of the Article
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Additional Findings
Cluster Analysis with more Variables
1 Informal Protection Group
2 Patent-Oriented Group
3 Copyright-Oriented Group
4 Non-Protection Group
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Content
• The German Economy
• Research Background
• Data and Empirical Analysis
• Additional Findings on the Four Modes of Appropriability
• Key Findings of the Article
• Conclusion
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Key Findings of the Article
Conclusion I
• Innovative small firms can be divided into four distinct groups accordingly to their appropriation
strategy
• For many small innovative firms, not whether they should use IPRs or not but whether to protect
their innovations from imitation at all
• On average: Patents and other IPRs are of low importance for innovation protection purposes
• But, informal protection methods and non-protection mode play much more dominant role
• Additionally, formal and informal protection mechanisms should not be seen as mutually exclusive
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Key Findings of the Article
Conclusion II
• Members of the patent-oriented group are much more innovative
• But, given relatively small size of the cluster: Patents might be less available for larger
number of small firms as they are more likely to innovate incrementally
• Summing up:
• Study implies that use of IPRs by innovative small firms is highly selective
• IPRs can be a crucial factor in their appropriation strategy
• “[…]do not perceive IPRs to be important since they either forgo active protection efforts entirely or
find alternative means of protection […]”
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Thank You For Your Attention!
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