|Title:||What impact does intellectual property have on the business performance of technology firms?|
|Author(s):||Willoughby, K. W.|
|Citation:||Willoughby, K. W. (2013). What impact does intellectual property have on the business performance of technology firms? International Journal of Intellectual Property Management, 6(4), 316-338.|
|Key Related Studies:|
|About the Data|
|Data Description:||All of the data utilised for the analyses reported in this paper came from an original empirical study, conducted by the present author, of technology firms in the bioscience-technology industries in the USA.
The data were generated by administering a detailed structured questionnaire survey to the CEOs of a sample of 184 bioscience-technology firms in the USA during 1997 and 1998. The work involved three phases: 1 sending introductory letters to the CEO of each firm to introduce the study and its purposes 2 completing the first half of the questionnaire through a structured telephone interview with the CEO (or CEO-equivalent) of each firm 3 completing the balance of the questionnaire by obtaining completed responses by fax or mail to a set of printed interview sheets.
|Data Type:||Primary data|
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|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:||No|
|Time Period(s) of Collection:||
This paper reports the results of an original empirical study of the relationship between intellectual property and the financial performance of technology firms in the bioscience-technology industries. The study found a statistically significant positive relationship between the firms’ investments in intellectual property and their performance. The performance measure was based upon revenue-growth data collected from each firm, and the categories of intellectual property analysed included patents, trade secrets, trademarks, copyright and licenses to externally sourced technology. This study also found that the financial benefits of accumulating a strong intellectual property portfolio were enjoyed by technology firms regardless of whether they were strategically oriented towards R&D or strategically oriented towards the commercial production of products and services.
Main Results of the Study
- In other words, there is statistically significant support for the proposition that the accumulation of IP by technology firms has a positive impact on their financial performance. This broad conclusion applies generally across all types of firms in the sample and to IP ‘in general’*The nature of the relationship is not uniform across the various types of IP. The positive contributions of IP to financial performance arise predominantly from the firms’ investments in patents, trade secrets and trademarks, rather than from their investment in copyright-protected items or from obtaining licenses to use technology from external sources.* Here is statistically significant support for the proposition that, insofar as the accumulation of IP by technology firms has a positive impact on their financial performance, the degree of this positive impact will be positively related to the degree to which the firms concentrate their efforts on research and development activities. In short, from the point of view of financial performance, IP appears to matter more for R&D-intensive firms than it does for firms that place less emphasis on research and development.
Policy Implications as Stated By Author
- First, strategies to improve the business performance of a firm will generally require more than simply investing more heavily in R&D or engaging more heavily in commercial production. It appears necessary for a firm to simultaneously invest in building up an appropriate IP portfolio.* Second, it is important for managers to artfully employ the right mix of IP rights in support of their technology strategy and business strategy.*Third, while the cost of obtaining, maintaining and enforcing IP rights can be very high – especially for small, entrepreneurial firms, including start-ups – the research presented here suggests that, on the whole, it is a price worth paying.
Coverage of Study