ABSTRACT
The extent to which competitive, technology-based companies invest in research and development has assumed increased policy significance in recent years. To ensure continued investment in research and development, firms need the incentive of sufficient commercial returns in order to make future investment worthwhile (for a wider discussion see Taylor and Silberston, 1973; Mansfield, Schwartz and Wagner, 1981; Levin, Klevorick, Nelson and Winter, 1987). As part of a strategy of bringing sophisticated technology-based products to market ahead of competitors and ensuring significant commercial returns, intellectual property plays an important role in corporate planning (see, for instance, Nevens, Summe and Uttal, 1990). When successfully used, an intellectual property strategy will ensure that competitor firms will encounter barriers as they attempt to enter a pioneering firm’s markets (see Tran, 1995). The barrier created by a corporate intellectual property strategy means that competitors lose valuable time in being able to launch their own products, allowing the innovative firm a temporary market share so as to recoup its investment in research and development and achieve a profit margin significant enough to encourage future investment.
