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The Impact of the Patent System on SMEs

  • Hughes, A.
  • Mina, A.
Registered author(s):

    The authors consider the theory and evidence on the propensity of small and medium-sized enterprises (SMEs) to patent their innovations. Drawing on UK, European and US literature and data sources, they show that small firms are less likely to use patents as a means of protecting their investment than other means such as confidentiality, secrecy or time to market. SMEs are also less likely than larger firms to use others' patents as a source of information for their own innovation activities, preferring customers, suppliers and trade fairs. Conversely, smaller firms are more likely than larger firms to put their patents to productive use or to licence out their technology, a pattern that is likely to reflect relatively higher cost and capacity pressures. Among the emerging trends, of particular interest for high tech SMEs is the role of patents as an increasingly important factor in obtaining financial backing by venture capitalists. A survey of UK and US small businesses conducted jointly by the Centre for Business Research (CBR) at Cambridge and the Industrial Performance Unit at the Massachusetts Institute of Technology provides data for further analyses which reveal that small firms in the United States are twice as likely as those in the UK to patent innovations, but are still much less likely to patent than larger US firms. The authors conclude with a general discussion of main findings from a UK and European perspective.

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    Paper provided by ESRC Centre for Business Research in its series ESRC Centre for Business Research - Working Papers with number wp411.

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    Date of creation: Sep 2010
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    Handle: RePEc:cbr:cbrwps:wp411
    Note: PRO-1
    Contact details of provider: Web page: http://www.cbr.cam.ac.uk/

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    1. Malwina Mejer & Bruno van Pottelsberghe de la Potterie, 2012. "Economic incongruities in the European patent system," European Journal of Law and Economics, Springer, vol. 34(1), pages 215-234, August.
    2. Rosemarie Ham Ziedonis, 2004. "Don't Fence Me In: Fragmented Markets for Technology and the Patent Acquisition Strategies of Firms," Management Science, INFORMS, vol. 50(6), pages 804-820, June.
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    4. Arundel, Anthony, 2001. "The relative effectiveness of patents and secrecy for appropriation," Research Policy, Elsevier, vol. 30(4), pages 611-624, April.
    5. repec:hal:journl:halshs-00177614 is not listed on IDEAS
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    17. Haeussler, Carolin & Harhoff, Dietmar & Mueller, Elisabeth, 2009. "To Be Financed or Not … - The Role of Patents for Venture Capital Financing," Discussion Papers in Business Administration 8970, University of Munich, Munich School of Management.
    18. Edwin Mansfield, 1986. "Patents and Innovation: An Empirical Study," Management Science, INFORMS, vol. 32(2), pages 173-181, February.
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    20. David D. Friedman & William M. Landes & Richard A. Posner, 1991. "Some Economics of Trade Secret Law," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 61-72, Winter.
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    23. David Encaoua & Dominique Guellec & Catalina Martínez, 2006. "Patent Systems for Encouraging Innovation: Lessons from Economic Analysis," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00177614, HAL.
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