Patent management in entrepreneurial SMEs: a literature review and an empirical study of innovation appropriation, patent propensity, and motives

Abstract

Managers make a number of strategic choices when trying to capture returns from innovation investments, including what appropriation strategy to use and whether or not to patent, strategic choices that depend among other things on firm size. Previous literature, being reviewed in this paper, shows that the patent propensity is lower in small and medium‐sized enterprises (SMEs) than in large firms and that patenting as means for appropriation is of less importance among SMEs. Chief executive officers (CEOs) and/or research and development (R&D) managers of 26 entrepreneurial SMEs have been interviewed to explain these differences and to provide insight on how patenting is used in SMEs. The patent competence was low among the studied SMEs, and internal patent resources were found to be important for effective and efficient use of the patent system, for application as well as monitoring and enforcement. While of limited perceived importance for protecting inventions in entrepreneurial SMEs, patents were used to attract customers and venture capital, which is of utmost importance for the survival and growth of these firms. Thus, patenting has an important role to play even in firms where the protective function of patents is secondary.