1. Economics and Policy of Innovation
Article Summary Ewald, Helen Università degli studi di Trieste
Prof. Vittorio Alberto Torbianelli |1

2. “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 |2

3. Content The German Economy Research Background
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

4. The German Economy The Role of Small and Medium Enterprises
Source: Statistisches Bundesamt (DeStatis 2014),
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5. 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),
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6. The German Economy Innovation in Germany
Businesses
Source: Bundesministerium für Bildung und Forschung (2016),
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7. 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),
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8. 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

9. 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
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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10. The Research Background Formal vs. Informal Protection
Granted as exclusive rights on intellectual property for a certain period
Types:
Patents,
Utility model,
Industrial design,
Trademark
Copyright (etc.)
Efforts by innovators to protect themselves against imitation
Types:
Secrecy
Complexity of design
Lead time advantages
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11. 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

12. 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 )
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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13. The Research Background The Cluster Analysis Part II
1251
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14. The Research Background The Four Modes of Appropriability I
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15. The Research Background The Four Modes of Appropriability II
1. Informal Protection Group
Highest scores in all three informal protection methods
IPRs no relevance
maintaining lead time advantage was most important
2. Patent Oriented Group
Technical IPRs important for protection of innovation results
Trademarks are also relevant
3. Copyright Oriented Group
Copyright protection as important protection mechanism for these innovators
Also: Trademark and industrial design
4. Non-Protective Group
Most innovative small firms
Made no conscious effort to protect their innovation during reference period
Seemingly face lower risk of imitation or other factors are responsible
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16. 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

17. 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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18. Content The German Economy Research Background
Data and Empirical Analysis
Additional Findings on the Four Modes of Appropriability
Key Findings of the Article
Conclusion

19. 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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20. 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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21. Thank You For Your Attention!
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