Patenting as a competitive tactic in multipoint competition

Abstract

PurposeThe paper's aim is to build a model that predicts the optimum tactics for capitalizing on inventions within the context of competitive interaction among large firms. For patenting, the paper seeks to show how invention value and firm rivalry drive the tactics of competing, deterring competitors, retreating from markets, and cooperating. It also aims to explore the effects of the contingencies of patent bulking, technology complexity, spheres of influence, resource similarity, and complementary‐resource tacitness.Design/methodology/approachThe work is conceptual.FindingsThe base model shows that patenting can be used to protect markets where there is high invention‐value and high rivalry. When both invention‐value and rivalry are low, the best tactic is to cooperate. When value is high and rivalry low, patenting can be used as a signaling and deterring mechanism, but when value is low and rivalry is high the best option is to let patents lapse and retreat from markets. The moderating effects of patent bulking, technology complexity, spheres of influence, resource similarity, and complementary‐resource tacitness affect rivalry and the amount of patenting that will be done.Research limitations/implicationsThe paper provides propositions for empirical testing that are predictive of firm performance, rivalry, and patent bulking. Despite the authors' attention to key contingencies, it is impossible to be completely comprehensive in addressing all contingencies.Practical implicationsThe framework provides tactics for competing and, consequently, maximizing income and minimizing costs.Originality/valueThe work synthesizes extant thinking on patents and multipoint competition. While the base model should be valuable for managers, the overall work should be valuable for academics.

Corporate governance and the impact to the R&D lab

“…Stern (2004) shows that R&D scientists accept economically meaningful reductions in salary and compensation in exchange for being granted more scientific freedom on the job. Increased dissatisfaction leads to increased departures of R&D scientists (Griffeth, 2000;Hom and Kinicki, 2001;Michaels and Spector, 1982;Mitchell et al, 2001), which in turn can influence a firm's competitive position, for instance due to limitations of intellectual property protection (Reed and Storrud-Barnes, 2011). In particular, the departure of inventors can disrupt routines (Huber, 1991) in the same way that the departure of professional football players decreases a team's competitive position (Aime et al, 2010).…”

Study on the various intellectual property management strategies used and implemented by ICT firms for business intelligence

“…This influences rivals to exit R&D competition and redirect their R&D efforts (Gill, 2008;Somaya, 2012). This may also be done by firms to generate prior art, so rival innovative firms may find it harder to obtain patents in the same technology domain, and the focal firm may be able to catch up with competitors in the race to own critical patents (Baker & Mezzetti, 2005;Somaya, 2012;Reed & Storrud-Barnes, 2011). Firms may patent "bad" inventions to mislead rivals in their efforts to build on the technologies disclosed in patents (Somaya, 2012).…”

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“…Donations can also act as signals of a firm's R&D capabilities, which in turn may attract financial capitals (Fisher & Oberholzer-Gee, 2013 (Gill, 2008;Somaya, 2012). This may also be done by firms to generate prior art, so rival innovative firms may find it harder to obtain patents in the same technology domain, and the focal firm may be able to catch up with competitors in the race to own critical patents (Baker & Mezzetti, 2005;Somaya, 2012;Reed & Storrud-Barnes, 2011). Firms may patent "bad" inventions to mislead rivals in their efforts to build on the technologies disclosed in patents (Somaya, 2012).…”