The use of Intellectual Property by Small and Middle-sized enterprises

Contents

List of Figures

List of Tables

List of abbreviations

Introduction

1. The world of Intellectual Property
1.1. What is Intellectual Property?
1.1.1. Nature of Intellectual Property: knowledge and innovation assets as important basis of IP
1.1.2. Features of Intellectual Property: uncertainty, inappropriability and indivisibility
1.1.3. The determinants of investments in Intellectual assets: Technology-push and Demand-pull
1.2. What are Intellectual Property Rights?
1.2.1. Definition and primary forms of IP protection
1.2.2. An analysis of IP rights from the economic perspective: Resource-based view
1.2.3. The importance of IP protection to the firm

2. Introduction to SME
2.1. Characteristics and classification of SME
2.2. The role of SMEs in the economy

3. Small and middle-sized enterprises in IP System
3.1. Innovation in the SME world
3.1.1. Strengths and weaknesses of SMEs in innovation process
3.1.2. Intellectual assets of SMEs: key influences on the innovative potential of SMEs ..
3.1.3. Pattern of innovation in SMEs
3.2. Formal and informal mechanisms used by SMEs
3.2.1. Formal protecting instruments
3.2.2. Informal IP rights
3.3. Reasons for using formal IP rights by SMEs
3.4. Perceived and real barriers faced by SMEs in exploitation of IP rights
3.5. Combination of IP right instruments

4. Toward good practices
4.1. Case studies on SMEs in IP system
4.2. Recommendations for SME

Conclusion

Reference

Appendix

List of Figures

Figure 1: Resources’ characteristics and Sustainable Competitive Advantage

Figure 2: Population of enterprises by qualitative and quantitative criteria

Figure 3: The economic weight of German SMEs

Figure 4: The scope of the chapter 3

Figure 5: Perceived barriers for using IPR by SMEs users of IPR services, in %

Figure 6: Innovation life-circle and combination of IP protection

Figure A.1: External Sources of Information Rated Important for Innovation in IV Small Firms

Figure A.2: External Sources of Information Rated Important for Innovation in IV Patenting Small Firms

List of Tables

Table 1: Major IP instruments, Subject Matter and common Application Fields

Table 2: Strength and weaknesses of Small Firms in innovation

Table 3: Main characteristics of different type of SMEs in innovation

Table 4: Use of IP rights in EU-27, 2004

Table 5: Use of IP rights by firm size (per employee in EU innovative firms), 2002-

Table 6: The distribution of patent uses by type of inventor

Table B.1: Patent, trademark and design applications per employment, by industry V and firm size, Australia, 1994-95 to 2000-01

Table C.1: Protection methods used by enterprises engaged in innovative activities, VI as a % of innovative enterprises, by enterprise size and by country, EU-27

List of abbreviations

Abbildung in dieser Leseprobe nicht enthalten

Introduction

Since the past half century we observe a growing importance of Intellectual Property (IP) which is often associated with a shift towards a knowledge-based economy. In knowledge- based economies, IP protection and management have become the highly important element for business success. Intellectual Property is everywhere: it is embedded in daily-needs products, high-tech equipment, technology, as well organizational routines. Having become crucial in modern world, Intellectual Property and knowledge capital, more than physical capital, drive economies of different countries. About 70% of business assets today are intangibles.¹

Not less important for economy are small and middle-sized enterprises (SMEs). This strategic sector covers the whole spectrum of economic fields and is a very important contributor to sustainable economic development. Representing over 90% of all business establishments and about half or more of GDP and export shares SME sector is often associated with a ‘backbone’ of most national economies.²

Intellectual Property is increasingly regarded as a valuable resource for individuals, firms and nations, and as a source of competitive advantage.³ Nowadays, companies are exploiting IP rights not only for protection and security of return purposes; they increasingly use them due to strategic reasons. Numerous studies and literatures⁴ recognized SMEs as an important contributor to innovation. However, there is still a little understanding of how SMEs manage their IP. Existing studies have focused mainly on large firms and, particularly, on patenting activity, and there are still few attempts to bridge all three together: SMEs, Intellectual Property and IP management.

The aim of this paper is an analysis of SME’s performance in innovation and the state of SMEs in IP system. For this reason two main questions were formulated: ‘How do SMEs manage their IP?’ and ‘Are SMEs really disadvantaged by their size in the use of IP rights?’ In order to answer the first question, the following aspects were examined: a way of usage different protection methods by SMEs, the reasons why they apply for IP protection and what obstacles SMEs may face in their exploitation of IP system. The paper discusses two major contrasting strategies: formal and informal methods of IP protection. The analysis of an exploitation of both strategies types in SMEs is provided from the perspective of appropriability (ability to reap the benefits from the holding of IP rights). It is an important element, which must be considered in company’s IP strategy.

Many theoretical studies and empirical scholars⁵ believe that lower usage of IP system in SMEs is linked to their size. The size aspect reflects firm’s access to financial capital, especial capital required for IP rights enforcement. Various grants and supporting actions, coming from the local governments for promoting and facilitating innovating potential in small enterprises and usage of IP system by SMEs, imply that there are the similar beliefs on the politician level. However, there are indications in some literature that SMEs are not disadvantaged in the use of IP system when compared to the large companies. For instance, the survey of Jensen and Webster (2006) showed that “given their innovative potential, SMEs apply for patents and trademarks at the same rate as large firms do”⁶. To support these arguments, the paper refers to existing empirical studies and interview surveys on SMEs in IP system. Moreover, with help of case studies from World Intellectual Property Organization (WIPO), European Patent Organization (EPO) and other regional IP agencies⁷, an additional analysis of SME’s state in IP system is conducted. The case study evidences show that despite of a number of SMEs challenges in IP system (costs of registration and enforcement), SMEs may use IP system more active and effective than some large firms do.

The structure of this thesis is as follows. Section 1 specifies two important subject of IP system: Intellectual Property and IP protection methods (IP rights). There is a discussion of main features, sources of Intellectual assets, as well the importance of IP of its protection for the firm. The second part describes definition, characteristics of small and middle-sized companies, and their role in the economy. Chapter 3 analyzes SME’s performance in innovations, discusses how SMEs exploit different formal and informal IP methods, and use various IP practices in combined. Section 4 provides the best practices on SME in IP system and formulates some basic recommendations, based on theory and case study evidence, for small and middle-sized businesses. Finally chapter 5 concludes.

1. The world of Intellectual Property

The term of Intellectual Property (IP) is the foundation of the modern knowledge-based economy. Intellectual Property and Intellectual Property Rights have become increasingly important for many dimensions of present economy. It is recognized as a ‘power tool’ for economic growth and wealth creation.

1.1. What is Intellectual Property?

1.1.1. Nature of Intellectual Property: knowledge and innovation assets as important basis of IP

Intellectual Property is often associated with intangible assets from the perspective of accounting and management literature. Intangible assets are non-physical, and not touchable. They are often considered as a possible source of future economic benefits; however, they are usually not reported on the balance sheet. Some studies suggest that “on average, 40% of the value of a company - that tied up in its intangible assets - is not shown in any way on its balance sheet”⁸.

Intellectual Property is considered as a very special type of a complex area of intangibles. It comprises knowledge, skills and other intangible assets, which business can convert into usable resources to generate a competitive advantage.⁹ Recognized as a valuable asset, it is extremely important to the firms. Strategies or innovations based on IP impact the further survival and prosperity of the business.

Intellectual Property takes various forms. It is usually embedded in individuals, products, or systems. It also can be a part of routines or services.

What exactly is IP? Literature defines Intellectual Property as “unique, value-adding creations of the human intellect that results from human ingenuity, creativity and inventiveness.”¹⁰ IP regards as a general term for innovation and invention. Both of them are attached to the development of new products and services. Innovations are associated with commercialization of new ideas, while inventions may not be directly related to commercialization.¹¹ Innovations and inventions can be protected by wide range of protecting instruments; nonetheless, some inventions do not need any protection because not all inventions have a commercial potential.

The development of IP is closely associated with factors such as learning, experience, and Research and Development (R&D) activities. Each of these elements contributes to the generation of new knowledge and to the number of technological improvements. The knowledge factor was recognized as an important determinant, driving output growth (Solow) and is considered along with such basic classic inputs like labour, land and capital.¹² That is the reason why the second half of the 20th century was considered as the ‘century of knowledge’. The evidence for increased knowledge intensity is particular observable in technology-based industries and service brunches.

1.1.2. Features of Intellectual Property: uncertainty, inappropriability and indivisibility

IP is usually based on knowledge and information. Unlike to physical goods, intellectual capital has the features of a public good: it is inherently non-rivalrous and non-excludable. The former means, that one person’s use of the good does not reduce another’s use. For example IP in form of a computer program or certain technical idea might be owned, used and enjoyed by several users. Non-excludability of IP means that nobody can be excluded from using this good without authorization. Indeed, if innovative creation is valuable and can be copied easily or used by others, there may be an incentive of free riding on someone’s investment. This problem can lead to lower incentives to innovate and invest in R&D. Therefore, it is in the interests of society to provide defined property rights on innovations, which create the legal protection and prevent others from accessing them.

Comparing intangible assets with physical goods, theory affirms that generating and sale of knowledge and Intellectual Property is subject to market failure with its three classical attributes: uncertainty, innapropriability and indivisibility.¹³

Production of intellectual assets is very often accompanied with uncertainty attribute. Uncertainty comes from situations, which are unlike past cases that it is not possible to estimate ex ante the outcome of the R&D processes.¹⁴ Some analysts note that a risk of unsuccessful outcome can be reduced through pooling many projects together; however, it cannot eliminate uncertainty.

With regard to the second failure, many scholars argue that knowledge is very inappropriate, due to its feature to be easily replicated at minimal costs. This has a negative impact on the inventors’ ability to extract quasi-rent and benefit from their invention. Appropriability of IP is the broadly discussed topic by numerous studies. This concept is associated with the ability to reap the benefits from the holding of IP that allows the IP owner to recoup the investment expenditures made in innovation. Appropriabilty is an essential factor influencing the company’s choice to invest in a certain creative idea. “The more is the firm ability to prevent duplication and imitation of its IP assets, the greater the degree of appropriability, ceteris paribus.”¹⁵ This implies that appropriability might be enhanced through different strategies against imitating and copying, and therefore, the question of possible methods of IP protection is of particular importance.

1.1.3. The determinants of investments in Intellectual assets: Technology-push and Demand-pull

The literature emphasises the role of Intellectual Property for business success of most companies. IP is basically associated with outcome from innovative capability. Therefore, the question is raised: What are the initial sources of such innovative capability? To answer this question, theorists have formulated a two way-broad categorization, which explains the determinants of innovation: innovations and inventions are affected by numerous of exogenous factors from the supply and market side, which are known as technology-push and demand-pull arguments.

- Technology-push argument

The main idea of the technology-push argument is that technological advances determine the rate and direction of innovation. The classic approach of ‘technology-push’ is based on an explanation that a company undertakes its R&D activities independently from the market, commercializes his/her idea and then launches onto the market. Skilled manpower and engineers, available technology opportunity of the industry and interaction with external science-based institutions are the examples of technology push factors. For instance, a firm can take up a new idea from the research university, which develops new technologies, but may have a difficulty with commercializing of their inventions. Technology push theories argue that firms should develop commercial product according to new technology coming from in-house or external R&D, and find customers who agree with that product offering.

Technology factor is often considered as a supply-side effect; there are numerous of empirical studies which confirm the importance of technological opportunity for the innovation’s generation.¹⁶ Thus, Dosi et al. (1988) stressed that the technology opportunities play an important role in major innovations and Patel et al. (1993) reported that innovation in chemical and electronic industries are particularly determined by science-based opportunities.

- Demand-pull argument

Unlike to the technology-push argument, the demand-pull view emphasises the need in the market-oriented approaches for the understanding of the question how innovation arises. According to the demand-pull idea, product developers must clearly understand consumers’ needs, wants and preferences.¹⁷ Regular analysis of market needs, information gathering through interaction with customers, suppliers, and competitors are the important factors of successful product development. Josh Billing’s “necessity is the mother of invention” highlights an idea of ‘demand-pull’ theory, which considers innovation as triggered in response to market demands. Demand-pull approach determines “ex ante decision of the scale and direction of R&D, pulling it towards areas where there are profitable markets.”¹⁸ Numerous studies stressed an importance of demand pull effects on innovation. Schmookler (1966) found a close correlation between patens and investment and concluded that the rise of investment induces demand for new processes, which gives a push to new innovative findings.¹⁹ Analyzing Community Innovation Survey (CIS1) data, Brouwer and Kleinknecht (1996) state that demand in the period 1990-1992 caused an increase of innovation output in the European Union (EU).

In fact, both technology-push and demand-pull approaches represent the simple linear models; they are emerging further in more complex models²⁰ of innovation. However, these both effects are recognized as basic explanations of innovations creation and thus, both of them are also a subject of Intellectual Property theory.

1.2. What are Intellectual Property Rights?

“Obviously, the ability to innovate firms to control the imitation strategies of other firms in their market will always remain limited. However, the choices managers make about how best to protect their intellectual capital can be a matter of life and death for their firm.”²¹

1.2.1. Definition and primary forms of IP protection

New ideas, innovations, creative works require a lot of investments in R&D and time, while the copy and imitating of innovations is cheaper and takes minimal time. Almost in every innovative field the fixed costs of producing new knowledge are high; at the same time the marginal costs of production are significantly low.²²

The R&D investments for IP development, a market demand for these IPs and a market structure in which they are sold are the general aspects influencing economic return on IP. The scale of the reward from IP can depend on protection instruments, which allow owners to control the use of these creations. These instruments are known as Intellectual Property Rights (IP rights). According to World Intellectual Property Organization (WIPO), IP rights may be defined “as exclusive rights granted by the State giving the owner the right to exclude all others from the commercial exploitation of a given invention, new/ original design, trademark, literary and artistic work and/or new variety of plant.”²³

IP protection instruments are supposed to stimulate innovation in many ways. In exchange for exclusive rights of use, sale and manufacture of the IP, the rights holder must disclose the information about his invention. Thus IP rights entail a tradeoff: on the one hand, they provide incentives to further innovations and on the other side a market distortion with monopolistic prices with associated welfare losses and limited access for follow-on innovators.²⁴ Disclosure of information relating to the technology allows society to benefit through new technology diffusion and encourages competitors to create follow-on innovations. This tradeoff between incentives to innovation and consequences of monopoly was mentioned by many researchers and analyzed in modern way by Nordhaus (1969).

Since the appearance of valuable new ideas and creations, different IP protecting instruments have been evolved. These instruments are distinguished to subject matter, protection period, and field of application.²⁵ They are supposed to balance the society’s interests in encouraging innovations, in keeping market competitive, and in sufficient supply. To say shortly, IP rights are intended to ensure a balance between private incentives and public accessibility. Table 1 illustrates different forms of IP protection.

Table 1: Major IP instruments, Subject Matter and common Application Fields

Abbildung in dieser Leseprobe nicht enthalten

Source: Braga P. et al. (2000)

Patents “cover inventions of both new and/or improved products and processes.”²⁶ Instead of disclosing of technical details of an innovation to the patent office, a patent holder receives an exclusive right to prevent others from imitating, using, selling an invention without the owner’s permission. In order to be patentable, invention must meet basic criteria of novelty, inventiveness, and commercial applicability. Patents are usually granted up to 20 years, after that the invention becomes subject to public use. Almost all manufacturing industries use the patent system for protecting their IP; however, other industries like biotechnology, agricultural industry became active patent users in recent time.

Another feature of patent is that a patent is solely valid for that country where it was granted. If patent protection is needed elsewhere, patent fillings are necessary for each country, in which protection is desired.²⁷ Nevertheless, in order to make the ‘international’ patent application process easier, in 1970 Patent Corporation Treaty (PCT) was concluded.

If an invention fulfils all requirements of patentability in one of the 139 member countries, the patent can be granted by various patent offices that take part in PCT.²⁸ Such procedure under the PCT is more favourable for an applicant in comparison of individual filings in each country, as well the fact that fees for national translations have to be paid later one.²⁹ In some countries there is an IP right instrument, similar to a patent, which is known as utility model. Utility models qualify novelty criteria less stringent and are usually granted for the small innovations with an incremental character. Industrial design is used for protecting the ornamental features of industrial, handicraft products (e.g., jewellery, house ware, textile design, etc.)

Another important pillar of the IPR system is the trademark that appears as a distinctive sign identifying a certain product or company. “Once registered it provides the rights to prevent others from using the same or similar marks on the same or similar products.”³⁰ Trademarks play a particular role in consumer good branches, like clothing, and watch industries. Similarly, geographical indicators are used for identifying a good (e.g., wine or olive oil) with a certain city or region.³¹

Copyright is a form of IP which protects original works of authorship. This mechanism gives the creators for a certain period of time³² exclusive rights to publish, distribute and adapt his/her creation. Copyrights may apply to artistic, scientific and literally works. Since recent time (1998) the copyrights provide protection to the computer software. “Copyrights confer two basic rights: a moral right by which the authors are entitled to ensure that any use of their work is faithful to the original, and an economic right for their effort to make sure they are paid for the use of their work.”³³ However, copyrights do not cover ideas, procedures and methods of operating themselves; they are regarded only to the form or manner in which they are expressed.

There are other specific and unique IPs for certain industries, which use additional, so-called sui generis form of protection. Two examples of sui generic protection are plant breeders’ rights and the protection of integrated circuits. The former protects new varieties of plant which differ from other known varieties. Layout design for integrated circuits refers to the protection of integrated circuits’ design that is produced in semiconductor industry. Similarly to copyright, this instrument helps to prevent unauthorized reproduction and distribution of the layout design for commercial purpose.

Finally, the trade secret represents an informal IP protection instrument. Different knowledge like a formula, process, pattern or compilation of information can be protected through trade secret. Unlike above introduced legal IP instruments, trade secrets protection does not require any disclosure of the innovation details. It is not protected by law to the same extend as trademarks or patents.³⁴ Alternatively, key information can be kept in secrecy through non-disclosure agreements for company’s employees. The most cited example of a trade secret is Coca-Cola’s recipe for its main beverage. Nevertheless, a disadvantage of trade secret is that it is comparatively easy to lose and very difficult to enforce.

The introduced legal protection tools are only one part of the total IP system. The important components of effective functioning of this system are various IP protection mechanisms, and the institutional framework, which administrates IP system and provide an enforcement of these rights.

1.2.2. An analysis of IP rights from the economic perspective: Resource-based view

The Intellectual Property system is broadly analysed from different disciplinary perspectives. One theoretical concept is the Resource Based View (RBV) that identifies Intellectual Property as a key enterprise’s resource, which determines competitive advantage of a firm and its performance on the market.

RBV’s followers argue that different profitability between firms depends on a difference in the resources these firms possess.³⁵ A firm was considered as heterogeneous entity with its valuable bundle of resources³⁶, in which IP assets become an increasing important part of such resources. The difference in the resource base of the firm can explain the company’s diversity and the diverse firm’s potential for profit making and for being competitive. A primary entity of the RBV’s analysis is a firm’s resource. According to RBV theorists, resources are inputs into company’s operation; they are controlled by a firm and play often a key role in firm’s strategy of improving its efficiency and effectiveness.³⁷ Intellectual Property counts to the important and determinative firm’s resources. Special attention on intellectual assets was placed by a number of RBV followers like Roos et al. (1997), Lev (2001), and Marr (2001).

According to the RBV, the main strategy of a firm is the profit-seeking behaviour with an effort to find a resource generating the rent streams and protect its competitive advantage.³⁸ One way to generate the rents from firm’s resources is the developing of Sustainable Competitive Advantage (SCA) of the firm through identification of a valuable bundle of resources, accumulation and its further development. Barney (1991) argues SCA can be resulted from the possession of resources that are valuable, rare, difficult to imitate, non- substitutable, as well as resources which can be used effectively by a firm (Figure 1). In addition to these requirements, resources should contain obvious competitive advantages over the rivals and be valuable for the customers. If the firm’s resource base meets all these criteria, this resource base shows a certain degree of appropriation that allows the firm to generate a rent from using these resources. These argumentations are the main part of RBV analysis that was represented by number of RBV theory proponents.³⁹ An example for the resource with SCA is a possession of patent rights on pharmaceutical substance, which is difficult to substitute and very hard to imitate.

Figure 1: Resources’ characteristics and Sustainable Competitive Advantage

Abbildung in dieser Leseprobe nicht enthalten

Source: Burr et al. (2007), p. 31

The RBV model provides an internal and partially external analysis of firm’s strength and weaknesses. From this perspective an appropriate strategy should be developed which exploit strength and eliminates weaknesses.

According to RBV “a firm have a sustainable competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy”⁴⁰

From this point of view, the value of such resource’s type is a matter of IP protection system.

Analysing firm’s resources according to the RBV model it becomes obviously that IP rights can be considered as a resources with a potential of SCA. These firm’s specific assets cannot be imitated easily and/or acquired in well-functioning markets. Moreover, they can contribute directly and indirectly to firm’s value creation process. Former is associated, for example, with licensing payments from patents or with higher sales through recognizable trademark. Otherwise the indirect value creation through IP rights is linked to firm’s capabilities to make its goods and services better than others. Additionally, some IP rights like patents and copyrights may contribute to development of firm’s knowledge-base resources, which are hard to imitate.⁴¹

1.2.3. The importance of IP protection to the firm

One part in the analysis of current IP system is the question of its importance. This question can either be analyzed from the global perspective or from the point of a certain firm. Over the last decades a series of researches have been making an effort to answer the question of IP protection importance through analyzing the level of relevance and effectiveness of IP systems. Some analysts classify IP rights into two groups: IP rights that stimulate inventive and creative activities (e.g. patents, copyright, industrial design, etc.) and IP rights that help to reduce asymmetries of information between producers and consumers concerning the products’ quality (trademarks, integrated circuits).⁴² Economists identify IP rights as a mechanism which ensures the returns to firm’s creations and innovations. The ways of gaining benefit is attached to firm’s resources and how they are used. Innovation is widely recognized as a key driver of business growth. It contributes to value creation of the firm, enhances its efficiency and helps a company to be competitive.

Firms may benefit through two types of innovation: process innovation and product innovation. Process innovation allows the firms to benefit from lower production costs under the condition that the price remains the same. In the case of, that firms can sell at a lower price, they have an opportunity to increase its market share with a further increase of return. Product innovation allows the firms to benefit from increasing the market share and gaining customer loyalty by offering them new products.⁴³

In order to gain benefit from innovation, they should be protected. IP rights help enterprises to reap a benefit from their creations by preventing competitors from copying and imitating their products, generally from free-riding. The use of the protection mechanisms can contribute to the firm’s competitive position. For instance, IP rights may be used for enhancing the firm’s image as technology leader, who possess or has access to key patented innovations. Trademark and an optimal brand strategy allow company’s managers to create a corporate identity that contributes to obtaining new markets.⁴⁴ Also IP rights can be advantageous when they signalize firm’s expertise and competency. Since patents are costly to obtain and must be checked for all necessary criteria of patentability, patents regard as a good signal, which helps the firms to attract venture capital and obtain an access to financing.⁴⁵ Moreover, valuable IP rights can enhance the commercial value of the company in the eyes of financial institutions and potential investors.

Companies can obtain additional revenue from IP rights through licensing them to other firms. Being engaged in cross-licensing agreements, firms can benefit from gaining access to each others technology, from avoiding wasteful costs of reverse engineering. Such agreements mean a certain degree of protection against players outside of the agreement as well.⁴⁶

Finally, firms which are engaged in IP systems can save a lot of time and resources by avoiding wasteful investment in already invented products. This is possible due to the information contained in patent documents; it enables firms “to be at the cutting edge of innovation in their technical field and to start research from a higher level”⁴⁷.

Concluding the arguments of IP protection importance, there is one interesting point of David Vaver: “The general purpose of protection is to encourage those who may wish to create, finance or exploit such products to translate intent into act, particularly where they might otherwise not act at all, or act less often or less well, without the carrot of protection.”

[...]

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¹ Kuusisto, Informal Ways to Protect Intellectual Property, available at: http://proact.ktm.fi/index.phtml?menu_id=207&lang=3, downloaded 2 March 2009

² See, for example, Iverson (2003), BMWI (2007); WIPO (2000)

³ Albert/ Bradley (1996); Kitching/ Blackburn (2003)

⁴ Pavitt et al. (1987); Acs/ Audretsch (1991); Vossen (1998)

⁶ Rothwell (1991); Hall/ Ziedonis (2001); Lanjouw (2003) Comp. Jensen/ Webster (2004), p. 21

⁷ For example, IP Australia, IA Center Scotland

⁸ Idris (2003), p. 7

⁹ Comp. Teece (2000), p. 40

¹⁰ Kalanje (WIPO), p. 2

¹¹ Comp. Rogers (1998), p. 5

¹² Peter Drucker even stated that only meaningful factor of production is knowledge and traditional resources- labor, land and capital - have become secondary.

¹³ This idea was first discussed by Arrow (1962) Comp.

¹⁴ Bosworth/ Webster (2006), pp. 88-89

¹⁵ Bosworth/ Webster (2006), p. 89

¹⁶ The arguments in favour supply-side factors can be found in works of Mowery/ Rosenberg (1979), Dosi et al. (1988), Patel/ Pavitt (1993)

¹⁷ Comp. Cooper (1979), p. 95

¹⁸ Bosworth/ Webster (2006), p. 92

¹⁹ See Schmookler (1966), p. 204-208

²⁰ Rothwell (1994) proposed “third-, fourth-, fifth-generations” innovation models that combine technology-push and demand-pull factors including other external factors like linkages between R&D and marketing, linkages with the firm and alliances, extensive networking and customized response

²¹ Laursen/ Salter (2005), p. 19

²² Comp. Gowers (2006), p. 12

²³ WIPO (2003), p. 2

²⁴ Comp. Gowers (2006), p. 35

²⁵ Comp. Brada et al (2000), p. 4

²⁶ Blackburn (2003), p. 6

²⁷ Comp. Radauer et al. (2007), p. 17

²⁸ In such a case an applicant have to translate patent documentation into the respective languages in every country he/she is looking for a patent protection.

²⁹ Comp. Radauer et al. (2007), p. 18

³⁰ Gowers (2006), p. 15

³¹ Comp. Brada et al. (2000), p. 3

³² Copyright protection is typically given for the life of the author plus 50-70 years.

³³ Blackburn (2003), p. 7

³⁴ Trade secrets may enjoy a level of legal protection, which varies significantly from country to country, but is generally considered weak.

³⁵ First developers of this view are Wernerfelt (1984), Rumelt (1984)

³⁶ RBV scholars often classify resources into 3 broad groups: tangible assets, intangible assets and organizational capability

³⁷ Comp. Barney (1991), p. 101

³⁸ See, for example, Fahy (1999)

³⁹ Comp. Barney (1991); Cool et al. (2002); Collis/Montgomery (2005)

⁴⁰ Ibid, p. 102

⁴¹ Comp. Burr (2007), p. 35

⁴² Comp. Braga et al. (2000), p. 30

⁴³ Comp. Greenhalgh/ Rogers (2007), p. 4

⁴⁴ WIPO (2003), p. 6

⁴⁵ Comp. Greenhalgh/ Rogers (2007), pp. 4-5

⁴⁶ Comp. Greenhalgh/ Rogers (2007), p. 4

⁴⁷ Capobianco, Chambers of Commerce and Intellectual Property, available at: http://www.intracen.org/btp/wtn/newsletters/2007/3_2/int_prop_3.htm, accessed 2 March 2009