Patenting as a competitive tactic in multipoint competition

Abstract

PurposeThe paper's aim is to build a model that predicts the optimum tactics for capitalizing on inventions within the context of competitive interaction among large firms. For patenting, the paper seeks to show how invention value and firm rivalry drive the tactics of competing, deterring competitors, retreating from markets, and cooperating. It also aims to explore the effects of the contingencies of patent bulking, technology complexity, spheres of influence, resource similarity, and complementary‐resource tacitness.Design/methodology/approachThe work is conceptual.FindingsThe base model shows that patenting can be used to protect markets where there is high invention‐value and high rivalry. When both invention‐value and rivalry are low, the best tactic is to cooperate. When value is high and rivalry low, patenting can be used as a signaling and deterring mechanism, but when value is low and rivalry is high the best option is to let patents lapse and retreat from markets. The moderating effects of patent bulking, technology complexity, spheres of influence, resource similarity, and complementary‐resource tacitness affect rivalry and the amount of patenting that will be done.Research limitations/implicationsThe paper provides propositions for empirical testing that are predictive of firm performance, rivalry, and patent bulking. Despite the authors' attention to key contingencies, it is impossible to be completely comprehensive in addressing all contingencies.Practical implicationsThe framework provides tactics for competing and, consequently, maximizing income and minimizing costs.Originality/valueThe work synthesizes extant thinking on patents and multipoint competition. While the base model should be valuable for managers, the overall work should be valuable for academics.