Intellectual Property – Lever or Barrier to the Globalization of Knowledgeintensive SMEs of Small Country Origin

Tonis Mets, Kalev Kaarna, Aleksei Kelli

Abstract


Although hundreds of research papers have been published on the issue of accelerated internationalisation, Born Globals and International New Ventures, the advancement for common theory of International Entrepreneurship (IE) has been limited. Little attention has been paid to Intellectual Property (IP) and its strategies in rapidly internationalising companies. Researching the role of IP in the internationalisation process is especially important in case of knowledge intensive small and medium size companies (KSME). It has been shown that KSME leverage knowledge and other resources in order to internationalise rapidly and gain competitive advantage on global market. This includes building on existing knowledge of markets and technology, and incorporating new knowledge domains until the value of products or services, incorporating all the knowledge, becomes more valuable than the sum of different knowledge domains. The paper aims to explore the role of intellectual property in the process of becoming global technology- and knowledge-intensive SME of small open economy country origin. The authors suggest that the impact of IP on globalization can be threefold. Intellectual Property Rights (IPR) can be a barrier to internationalisation, it can be a blocker for constraining competitors’ ability to leverage, and it can support the market and knowledge leverage. Conducted case study analysis is based on POMstrategy model, the process theory and market-knowledge leverage framework of globalization of KSMEs, and above mentioned IPR categorisation. Four companies were chosen for case studies: Regio (mobile positioning software company), Skype Technologies S.A. (global VoIP company), Asper Biotech (small global biotech company), and Icosagen (small biotech company). For all companies obtaining IP rights or not obtaining them has been a barrier. Patenting is costly for companies in early stages. In case of software, the best strategy can be the utilisation of copyright and trade secret protection (as in case of Regio). Skype, Asper and Icosagen have used patenting also for either blocking their competition or guaranteeing freedom to operate for themselves. All four case companies gained VC funding or financial support from academic institutions. In case of Regio the funding was gained despite the lack of protected IP in form of patents. The companies used the financing and funding in different development stages and for different purposes. Only two companies out of the four have used their patents to leverage their knowledge domains or market penetration. Protected patent portfolio has allowed Skype to advance to different markets and increase the number of services provided. Icosagen has been able to standardise their patent protected technology, which is heavy blocker, but also creates leverage effects for Icosagen technology. KSMEs have usually relatively low resources for marketing, but not only, there is a lack of resources for anything. But this can be not disturbing to global breakthrough as seen on the example of Skype. Clever business model, protected IP and free of charge basic service can create absolutely new approach in the industry. Moving from a single product/knowledge domain to a “high system” products is not the absolute rule. Market can cause the contrary processes, i.e. simplifying complexity of the product and its IP protection. For SME the focus on the concrete technology and product creates preconditions for global breakthrough, but is not the guarantee for leverage of all accumulated competences globally. It depends on “happy” combination of product development and IP, allied partnerships and market, and business model linking all these factors together.


Keywords


accelerated internationalisation; International Entrepreneurship; knowledge leverage; IPR

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Print ISSN: 1392-2785
Online ISSN: 2029-5839