Institutional Contexts, the Management of Patent Portfolios, and the Role of Public Policies Supporting New Entrepreneurial Ventures

This chapter aims to increase our understanding of the relationships between firm strategies, the design of institutional contexts on behalf of public agents, and the stimulation of diffused entrepreneurship within the economic system. In particular, it analyzes the way in which firm patent portfolio management strategies may systematically hinder the emergence of entrepreneurial endeavors within the economic system and, on this basis, critically discusses how the acknowledgement of these interactions should influence the design of public policies at the economic system level. We argue that in economic contexts where intellectual property rights (IPR) are influential, large firms may intentionally develop and strategically manage wide portfolios of patents in order to purposely pre-empt the rise of direct competition and thwart the efforts of new potential entrepreneurs, rather than merely to protect the fruits of their R&D. This strategy leads to patent proliferation, eventually hindering the emergence of nascent entrepreneurship, thereby preventing the creation of new value in the system. The pre-emptive strategy described may be observed in a variety of contexts in which global firms (such as IBM, Microsoft and other firms in the biotech, nanotech and pharmaceutical industries) tend to aggressively invest in building and protecting wide ranged and overarching patent portfolios directed primarily toward preventing potential competition.