Friday, July 19, 2013

On the Effectiveness of Patenting Strategies in Innovation Races

MIHM Jürgen, STING Fabian J., WANG Tan
Read the working paper
INSEAD Working Paper 2013/88/TOM revised version of 2012/28/TOM

Which inventions should a company patent? Should it patent at all? Many companies engaged in an innovation race seek a patenting strategy that will protect their intellectual property, but not much is known about factors that determine the best strategy. Although scholars in various management, economics, and engineering disciplines have conducted research on patents, little work has addressed the normative issues pertaining to formation of an appropriate patenting strategy. We develop an inventory of patenting strategies and integrate them into a framework accommodating the contingencies that influuence their selection. Our simulation model characterizes the optimal patenting choices for different settings, and it captures the dynamics between firms that compete via strategic interactions. We identify those competitive dynamics driven by the choice of R&D strategy as the most salient determinant of the firm's optimal patenting strategy. Thus our research contributes to establishing a contingency theory of patenting strategies.