The Effect of Business Characteristics on the Methods of Knowledge Protections

Abstract

Intellectual property (IP) protection has been suggested to be essential in protecting innovation in product-dominant companies. However, with the development of service industries, the ineffectiveness in IP protection becomes manifest. Meanwhile, other knowledge protecting methods enable companies to maintain their competency without formal protection. This study examines the effectiveness of different means of knowledge protection. Specifically, business is classified according to companies’ offering nature, serving mode and consider about their business hardware. The effectiveness of protection methods is analyzed among these business types. Interviews were conducted with senior managers of 39 companies in China and Singapore. It is demonstrated that the choice of knowledge protecting method does not depend mainly on whether a company provides products or services, but on how the company produces and provides its offerings. It is found that the core competency of companies largely affects their attitude on whether to protect their offerings. It is found that in weak appropriability regimes, companies apply for patents not for their knowledge protection function, but for other benefits, such as getting awards or tax reductions, and improving reputation among customers.