Organizational Effects of Intellectual Property (Micro Level)

This chapter identifies real-world circumstances in which secure IP rights are a precondition for innovation specialists to extract value from R&D investments, given the ability of large integrated firms to imitate any successful innovation and capture the market through financing, production, and distribution efficiencies. Survey evidence and other evidence on patent application, issuance, and enforcement indicate that smaller firms tend to place a higher value on patents than larger firms as a mechanism for capturing returns on innovation. A secure IP regime enables firms to select from the full range of monetization structures in order to assemble the maximally efficient mix of organizational forms for executing the innovation and commercialization process.