Appropriability Mechanisms of Product Innovations: Empirical Analysis for the Czech Republic

Abstract

Purpose of the article: is to reveal appropriability mechanisms the Czech product-oriented small and mediumsized enterprises (SMEs). Methods: of the research were based on on-line questionnaires distributed to a sample of 208 mainly manufacturing, innovative firms during 2011–2012. Scientific aim: was to explore how Czech firms value their IP and intangible assets, as juxtaposed to tangible assets. Additional aims were to investigate how firms protect their innovations with various statutory and nonstatutory mechanisms and what are their motivations to patenting. Findings: We found that good reputation of a firm, loyalty, qualifications and high motivation of the employees along with a stimulating internal environment are the assets that firms consider as being most instrumental in its further development. Regardless the size of the firms, the continuous innovation is far the most frequently used protective measure. SMEs also commonly rely on lead time advantages, secrecy, complementary manufacturing or marketing capabilities and utility models. Large firms, on the other hand, use more frequently various statutory means including patents, utility models and trademarks followed by secrecy. Patents, however, are widely applied in a few industries only that include nanotechnology, biotechnology, pharmaceutical and cosmetic industry, “green energy” sector and, less frequently, electro-technical and automotive sector. Firms operating in these specific industries commonly combine patents with other protective means in advanced IP strategies. The firms patent for reasons that often extend beyond simply profiting from a patented innovation. In addition to the prevention of copying, the most prominent reasoning for patenting include various strategic motives, like using patents to improve the position in negotiating, the prevention of rivals from patenting related inventions (i.e. “patent blocking”) and the prevention of suits. Conclusions: Our findings raise serious questions regarding the functioning of the existing system of intellectual property rights when key national policy goals include innovation by and growth of small and medium-sized firms.