How market smarts can protect property rights.
Intellectual property comprises an ever-increasing fraction of corporate wealth, but what's the good of that if an ever-increasing fraction of the property is copied or stolen? Faced with developing countries' limited and inadequately enforced patent and copyright laws, some companies are resorting to market-based strategies to protect their intellectual property. These include preempting or threatening competitors, embedding intellectual property in environments that can be protected, bundling insecure intellectual property with its more secure cousins, and actually entering the businesses that pose a threat. The authors urge companies coping with weak property rights to follow a decision tree when choosing which strategies to use and when: Start by thinking of the strategies that will protect your business's core. If, for example, a first-mover advantage is within reach, making yourself more committed to intellectual property could be the answer. If you and your rivals are equally matched, ask yourself, "Can those that threaten me with copying be copied in turn?" The knowledge that each of you can hurt the other may dampen the competitive intensity or even lead to voluntary sharing of property. If these solutions fail or don't apply, try forging a connection with a product or business closely related to your own. Doing so may prevent a valued asset from falling into a rival's hands or make the asset harder to misappropriate. This approach can even help you expand your piece of the market pie or reduce the cost of making the threatened product, perhaps to the point where you can compete against pirated goods. Finally, if there still doesn't seem to be a way of making money from your threatened product, you may choose to move into the very business that has hurt your own. Such strategies are behind the economics of successful companies like Intel and NBC, say the authors.
Anand
Bharat
B
Harvard Business School, Boston, USA. banand@hbs.edu
Galetovic
Alexander
A
D003309:Copyright; D004465:Economic Competition; D005607:Fraud / Q000331:legislation & jurisprudence / Q000517:prevention & control*; D006801:Humans; D018973:Intellectual Property; D040541:Marketing / Q000379:methods*; D015714:Plagiarism; D010934:Planning Techniques; D011357:Product Line Management / Q000379:methods*; D013800:Theft / Q000331:legislation & jurisprudence / Q000517:prevention & control*; D014481:United States