Professional Documents
Culture Documents
Research Policy
journal homepage: www.elsevier.com/locate/respol
Department of Management, Faculty of Business, Laval University, Qubec City, QC, Canada G1V 0A6
Regulatory, Legislative and Economic Affairs Division, Programs and Policy Branch, Canadian Food Inspection Agency, 59 Camelot Drive, Ottawa, ON,
Canada K1A 0Y9
a r t i c l e
i n f o
Article history:
Received 13 July 2007
Received in revised form 10 June 2008
Accepted 1 July 2008
Available online 22 August 2008
Keywords:
Protection methods of intellectual property
KIBS
Correlation approach
Complementarity
Multivariate Probit regression
a b s t r a c t
How do knowledge-intensive business services (KIBS) protect their inventions from imitation by rival rms when choosing among various protection mechanisms? Data from the
2003 Statistics Canada Innovation Survey on services are used to investigate this issue by
looking into complementarities, substitution and independence among eight protection
mechanisms. A Multivariate Probit (MVP) model is estimated to take into account the fact
that KIBS simultaneously consider many alternative intellectual property (IP) protection
methods when they attempt to protect their innovations. Results show that patents, registration of design patterns, trademarks, secrecy and lead-time advantages over competitors
constitute legal and informal methods that are used jointly. These complementarities suggest that IP protection mechanisms that are interdependent and reinforce each other to
protect innovations from imitation by rival rms constitute a pattern on which rms rely
to protect their innovations from imitation. A second pattern is based on the fact that KIBS
rely on patents and complexity of designs as substitutes, and tend to use registration of
design patterns and complexity of designs as substitutes in protecting their innovations
from imitation. A third emerging pattern concerns protection mechanisms that are independent from each other and exhibit no synergy, and do not reinforce each other to protect
innovations from imitation by other rms.
2008 Elsevier B.V. All rights reserved.
1. Introduction
Knowledge-intensive business services (KIBS) provide
services based on professional knowledge. In that industry, transactions consist of knowledge and outputs are
often intangible. Innovations result more often from new
combinations of knowledge rather than from new combinations of physical artefacts. Moreover, as pointed out by
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and mutually reinforce each other (the complementarity hypothesis). Similarly, as suggested by Howells et al.
(2003), informal protection mechanisms may be considered as supplementing the legal mechanisms used to cover
and to strengthen the protection of innovations for components not covered by legal mechanisms. For example,
license agreements under patents usually include the use
of knowledge protected by patents and the use of knowledge protected by trade secrets. According to Jorda and
Kaeschke (2007, p. 64): . . . licenses under patents without
access to associated or collateral know-how have little commercial value because patents rarely disclose the ultimate
scaled-up commercial embodiments. Therefore, informal
protection mechanisms may be considered as complementary to legal mechanisms because they provide synergy and
optimise the use of legal mechanisms.
Furthermore, the complementarity hypothesis competes with the substitution hypothesis. The substitution
hypothesis rests on the idea that KIBS are resourceconstrained and therefore, investments of resources in
protecting their innovations through legal mechanisms,
notably through patents, come at the expense of investments in the use of informal mechanisms, more likely at
the expense of trade secrets and lead-times. Following this
hypothesis, KIBS are expected to invest their resources and
efforts on those mechanisms that provide the best protection for their innovations. The substitution hypothesis
assumes that protection mechanisms are separate and do
not reinforce each other.
Studies dealing with manufacturing rms and sciencebased rms have investigated complementarity between
patents and secrecy (Arora, 1997). Those looking into various protection methods have focussed on the importance
and the effectiveness of patents, compared to informal
methods to protect inventions and technological innovations (Knig and Licht, 1995; Levin et al., 1987; Arundel,
2001; Hanel, 2001). Very few studies have examined the
question of how several protection methods are used in
complementarity to prevent imitation from competitors
(Cohen et al., 2000; Arundel, 2001; Hanel, 2001; Blind and
Thumm, 2004; Landry et al., 2006).
A pioneering study conducted by Miles et al. (2000)
on the protection of innovation has independently considered the level of use of copyrights, design rights, patents
and trademarks by KIBS. A factor analysis study of the
preferences of 65 service rms from many sectors, including business services, showed that service rms rely on
four combinations of mechanisms, the rst being a mix
of patents, trademarks and copyrights; the second, a mix
of secrecy, lead-time advantages and customer relationship management. A third combination concerns bundling
long-term labour contracts and exclusive contracts with
suppliers; nally, a fourth mix concerns combining complex product design and embodying intangible products
(Blind et al., 2003, p. 81). To the extent of our knowledge,
this study is the rst to specically explore the complementary and substitution hypotheses regarding KIBS.
To sum up, there is no denitive theoretical answer to
the complementarity and substitution issues. Thus, they
have to be addressed at the empirical level. As stated
earlier, this study takes into account eight protection mech-
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Hypothesis 8. KIBS are more likely to attempt to protect their product innovations through patents rather than
informal protection mechanisms, and conversely, more
likely to protect their process innovations through informal
rather than legal protection mechanisms.
In this paper, types of innovation were measured with
a series of binary variables dened as follows: PRODU is
a binary variable coded 1 if, between 2001 and 2003, the
rm introduced onto the market only new or signicantly
improved products and did not introduce new or significantly improved processes, and 0 otherwise; PROCE is a
binary variable coded 1 if, between 2001 and 2003, the
rm introduced onto the market only new or signicantly
improved processes and did not introduce new or signicantly improved products, and 0 otherwise. Finally, SIMULT
is a binary variable coded 1 if, between 2001 and 2003, the
rm simultaneously introduced onto the market new or
signicantly improved products and processes, and 0 otherwise. This last category of rms was used as the reference
category in the regression model.
3.4. Industries
Survey research shows that a rms propensity to rely
on legal protection mechanisms varies across industries
(Cohen et al., 2000; Levin et al., 1987; Arundel, 2000, 2001;
Somaya, 2004). Studies on innovation tend to suggest that
knowledge becomes highly idiosyncratic at the rm level,
and that industries signicantly differ with respect to their
knowledge base and knowledge absorptive capabilities
and, therefore, their innovation capabilities. Industries that
rely heavily on professional knowledge, like KIBS, provide
a very fruitful terrain to test this hypothesis. Following, we
have differentiated the traditional professional service KIBS
from the technology-based KIBS. The rst group provides
services based on specialized knowledge of administrative
systems and social affairs, while the second group of rms
provides services linked to technology, and the production and transfer of technological innovations. Innovations
developed by technology-based KIBS involve more codied knowledge and more tangible outputs that are likely
easier to protect with legal protection mechanisms, especially patents (Miles, 2008). Conversely, service innovations
produced by traditional professional service KIBS involve
degrees of tacit knowledge and degrees of intangible outputs that are more suited for the use of informal protection
mechanisms linked to secrecy and legal mechanisms such
as condentiality agreements (Miles et al., 2000). Therefore, one may hypothesise that:
Hypothesis 9. Technology-based KIBS are more likely to
attempt to protect their innovations by relying on patents
rather than on informal mechanisms, and conversely, traditional professional service KIBS are more likely to protect
their innovations by relying on informal rather than on legal
protection mechanisms.
To test these hypotheses, one type of traditional professional service KIBS (Management Consulting Services)
and two types of new technology-based KIBS (Engineering
Consulting Services; Computer System Design Services) are
1536
3
The statistical unit of observation for the survey is the establishment.
In the following sections, the establishment will be referred to by the term
rm.
1537
Services rely more on lead-time advantages than establishments in Engineering Consulting Services.
These ndings about the dependent variables, i.e., the
protection methods, have to be nuanced with regard to
results of prior studies in manufacturing industries (Levin
et al., 1987; Cohen et al., 2000; Arundel, 2000; Hanel, 2001),
as well as prior studies in service industries (Hanel, 2001)
which showed that establishments rely more on informal
rather than on formal methods in order to insure their
IP protection. In this study, we found that, overall, condentiality agreements are used by a larger proportion
of establishments and that copyrights are the third most
frequently used protection method by establishments operating in Management Consulting Services.
With regard to the explanatory variables (Table 2), in
2003, the average establishment had 22.82% of its fulltime employees involved in R&D activities; earned 25.8%
of its total revenues from sales to clients outside of Canada;
scored 3.60 out of a possible maximum of 5 on the index of
knowledge-development strategies; 1.60 and 3.21 out of a
possible maximum of 5 on the External Knowledge-Sharing
with Research Organizations and with market organization
indices, respectively. Finally, the average rm scored 3.49
out of a possible maximum of 5 on the index of internal
knowledge-sharing.
Furthermore, Table 2 shows that 37.6% of the establishments are part of a larger rm. Moreover, 17.5% of the
establishments have less than 20 employees, 45% of them
have between 20 and 49 employees, 20.5% between 50
and 99 employees, and 17% of the establishments have 100
employees or more. As for the innovation types, between
2001 and 2003, 43.8% of the establishments surveyed introduced, onto the market, only new or signicantly improved
products, 12.6% introduced, onto the market, only new
or signicantly improved processes, and 43.6% simultaneously introduced, onto the market, new or signicantly
improved products and processes. Finally, slightly less than
one quarter of the establishments were in Engineering Consulting Services, 58% in Computer System Design Services,
and 18% in Management Consulting Services.
4.3. Analytical plan
Previous empirical studies on complementarities
between various variables have been based on three
main approaches, namely, the productivity approach,
the reduced form exclusion restriction approach, and
the correlation approach. The rst approach involves
modelling a measurement of a rms objective function
with parameters that specify the interactions between
choices. These parameters are interpreted as indicators
of complementarity. In such a model, the distribution
of interactions among choices is identied, and choices
may be complementary for some rms, independent for
some others, and substitute for others (Athey and Stern,
1998; Ichniowski et al., 1997; Mohnen and Rller, 2002;
Mancinelli and Massimiliano, 2007).
In the second approach, the study of complementarity
is carried out by focussing on the effects of two factors, and
on their correlation (Arora, 1996; Athey and Stern, 1998).
As mentioned by Galia and Legros (2004, p. 1192), the idea
1538
Table 1
Distribution of the IP protection methods for the three selected services industries for the sub-population of innovative establishments
IP protection methods
Engineering Consulting
Services [a]
Management Consulting
Services [b]
Legal methods
Patents
Registration of design patterns
Trademarks
Copyrights
Condentiality agreements
15.7
11.8
34.5
41.0
77.0
12.9=bc
10.7+bc
18.6bc
28.6bc
49.4bc
15.9=a=c
5.6ac
27.2+ac
37.6+ac
73.3+ac
16.8+a=b
14.3+a+b
43.4+a+b
47.1+a+b
89.5+a+b
Informal methods
Secrecy
Complexity of designs
Lead-time advantages
53.8
37.6
60.1
53.2+bc
39.8+b=c
52.8=bc
31.1ac
33.0ac
48.2=ac
61.4+a+b
38.1=a+b
67.0+a+b
Note: The gures reported in columns 2, 3 and 4 are based on Statistics Canada estimates whereas column 1 and Chi-square tests were produced by the
authors. (a), (b) and (c) refer to the three selected services industries. The signs (+) and () indicate that, for each IP protection method considered in the
rows, the proportion of establishments that have used this IP protection method is statistically signicantly (p < 0.1) greater or smaller for the industry
considered in the columns than the other industries according to Chi-square tests. The sign (=) indicates that no signicant differences exist between the
industries regarding the use or not by the establishment of this IP protection method. The null hypothesis (independency between two variables) was
rejected with signicance levels of 10% or less.
Table 2
Descriptive statistics
Variables
Continuous variables
R&D intensity [% of full-time employees involved in
R&D activities in 2003]
Export [% of total revenues that came from sales to
clients outside of Canada in 2003]
Knowledge Development Strategies Index
External Knowledge Sharing with Research
Organizations
External Knowledge Sharing with Market
Organizations
Internal knowledge sharing
Type of variables
Mean
Standard deviation
Cronbachs
Continuous number
22.82
26.35
Continuous: number
25.87
34.99
3.60
1.60
0.73
0.82
0.71
0.81
3.21
0.82
0.55
3.49
0.86
0.67
Categorical variables
Percentage of rms that the operations of their business units
are part of larger rms
Innovation in products only
Innovation in processes only
Innovation in products and processes
43.8%
12.6%
43.6%
17.5%
45.0%
20.5%
17.0%
Services industries
Engineering Services
Computer System Design Services
Management Consulting Services
23.9%
57.7%
18.4%
Subsidiary rm
Innovation types
37.6%
when more than two choice variables are under study, the
correlation approach offers a general solution to testing
complementarity among various IP protection methods, as
no limit is set on the number of such variables. We studied
8 IP protection methods, and therefore could not use the
reduced form exclusion restriction approach.
To the extent of our knowledge, the Multivariate Probit model approach to data analysis has never been used
to address the issue of how knowledge-intensive-based
service establishments combine various IP protection
methods in preventing imitation from rivals. The multivariate probit specication allows for systematic correlations
between choices for the different protection strategies.
Such correlations may be due to complementarities (positive correlation) or substitutions (negative correlation)
between strategies. In using the multivariate probit estimation method, the issue of inefcient estimates in separate
Probit models is resolved, where signicant correlations
exist among IP protection methods (Belderbos et al., 2004).
The Multivariate Probit model used in our study consists of eight binary choice equations. These choices are for
the IP protection strategies used by Canadian knowledgeintensive service establishments operating in three service
industries, namely: Engineering Services, Computer System Design Services and Management Consulting Services.
Five IP protection strategies refer to formal or legal
IP protection methods and are: Patents, Registration of
design patterns, Trademarks, Copyrights, and Condentiality agreements. Three other IP protection methods refer to
strategic or informal methods and are: Secrecy, Complexity
of designs and Lead-time advantages over competitors.
The MVP model, an extension of the standard Probit
model, is used in estimating the following system of eight
binary dependent variables. It allows for jointly estimating several equations while controlling for the existence of
mutual correlations between their disturbances (Galia and
Legros, 2004; Belderbos et al., 2004).
The model is written as follows:
Y = X +
where:
y1
y2
.
Y=
. ;
.
y8
...
b80 , b81 , b82 , . . . , b811
1
x1
x
2
X=
. ,
.
.
x11
1
2
.
and =
.
.
8
with Y being the vector of the eight binary dependent variables and X the vector of the explanatory variables for the
eight equations. These are as previously dened (Section
3.2) and are the same for all eight dependent variables.
is the matrix of the coefcients to be estimated and rep-
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4
McFadden R2 is calculated as: 1 [log L()/log L0 ] where log L0 is the
value of log-likelihood function subject to the constraint that all coefcients except the constant are zero, and log L() is the maximum value of
the log-likelihood function without constraints.
5
According to Sonaka et al., McFadden R2 in the range of 0.20.4 are
typical for logit models.
1540
Table 3
Multivariate Probit regressions results
Independent variables
Intercept
R&D investment
SrRDa
Patents
Complexity of designs
2.855**
0.052
1.957**
0.087
0.823**
0.079
0.559**
0.060
1.068**
0.077
0.569**
0.055
0.649**
0.053
0.051**
0.038
0.024
0.790
0.079**
0.075
0.070
0.203
0.064
0.226
0.107**
0.026
0.049**
0.085
0.063**
0.076
0.583
0.102
0.744
0.167
0.358
0.244**
0.063
0.109**
0.081
0.061
0.965
0.225**
0.099
0.198*
0.159
0.202*
0.139
0.356***
0.247*
0.157
0.070
0.685
0.082
0.591
0.606
0.071
0.649
0.331**
0.031
0.114
0.370**
0.053
0.356**
0.713**
0.306**
0.535
0.132
0.993
0.076
0.769
0.570
0.107
0.648
0.167
Lead-time advantages
0.009
0.013
0.947
0.059
0.023
0.884
0.078
0.090
0.246*
0.357
0.327**
0.006
0.203
0.232
0.355**
Coefcient P-value
()
0.613
0.050
0.909
0.157
0.484
0.560***
0.583
0.079
0.494*
0.673**
0.111
0.098
0.110
0.906**
0.693
0.041
0.684***
0.814**
0.009
0.063
.072
0.369
0.823
0.362
0.079
0.107
0.762
0.761
0.381**
0.759*
0.041
0.139
0.029
0.069
0.914
0.854
0.056
0.067
0.070**
0.144**
0.076
0.034
0.527**
0.177**
0.057
0.061
0.273***
0.315
0.003
0.859
0.119**
0.064***
0.093
0.006
0.276**
0.228**
0.032
0.046
0.259
0.555**
0.301
0.040
0.203
0.341*
0.428
0.137
0.427*
0.114
0.182
0.112
0.800
0.319
0.315**
0.369
0.216
0.082
0.257
0.427
0.204
0.070
0.208
0.208
0.803
0.417
0.173
0.584**
0.251
0.415
0.031
0.409
0.042
0.644***
0.169
0.765
0.010
0.517
0.023
0.070
0.186
0.875
0.797
0.464
0.143
0.584
0.059
0.290
0.015***
0.985
0.091
0.239
0.097**
0.714***
0.508***
0.393**
0.358
0.535***
0.105**
0.521***
2
0.000
0.004
0.049
0.370
0.002
0.032
0.007
2625
1125.560
0.129
1293.59***
1251.30***
1242.62***
0.556***
0.442**
0.094
0.356*
0.156**
0.272
3
0.010
0.033
0.757
0.139
0.078
0.222
0.689***
0.371**
0.118
0.011
0.253
0.000
0.066
0.492
0.950
0.294
0.391** 0.057
0.249 0.235
0.095 0.499
0.160 0.348
0.345**
0.367**
0.357**
0.042
0.036
0.021
0.077
0.596***
0.612
0.0000.1050.499
Compares the unrestricted model to the nave model containing only the intercept for each of the eight equations
Compares the unrestricted model to the model forcing the correlations between the equations disturbances to be equal to zero
Compares the unrestricted model to the model forcing the regression coefcients for each of the 12 independent variables to be equal across the 8 equations
and *** indicate that the coefcient is signicant, respectively, at the 10%, 5% and 1% thresholds.
Sr indicates a square root transformation.
Ln indicates a logarithmic transformation.
Reference category is Development of Product and Process.
Reference category is Computer System Design Services.
c
d
Secrecy
0.063
Condentiality
agreements
2.545**
2
3
4
5
6
7
8
Copyrights
* , **
Trademarks
Knowledge variables
Internal knowledge
0.120
sharing
0.023
External Knowledge
Sharing with Research
Organizations
External Knowledge
0.105
Sharing with Market
Knowledge development 0.168
Strategies
Services (type services)
Development of Productc 0.180
Development of Processc 0.702**
Industry sectors
Engineering Servicesd
Management Consulting
Servicesd
Control variables
Size LnSIZEb
Export
Subsidiary Firm
Registration of design
patterns
6
Hence, for example, a same variable might exert a signicant positive
impact on some protection methods but not on all of them.
1541
1542
Table 4
Summary table of the Multivariate Probit regressions results explaining the choice of the protection strategies
Independent variables
Patents
Registration of
design patterns
Trademarks
Copyrights
Condentiality
agreements
Secrecy
Complexity
of designs
Lead-time
advantages
R&D investment
SrRD
NS
NS
NS
NS
NS
NS
NS
NS
+
+
+
+
NS
NS
+
+
NS
+
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
+
NS
NS
+
NS
NS
+
NS
NS
NS
NS
NS
NS
+
NS
NS
+
NS
NS
NS
NS
NS
NS
NS
+
+
+
NS
+
+
+
NS
+
NS
+
+
NS
NS
NS
+
NS
NS
NS
+
+
+
NS
+
NS
Knowledge variables
Internal knowledge sharing
External Knowledge Sharing
with Research Organizations
External Knowledge Sharing
with Market
Knowledge development
Strategies
Services (type services)
Development of Product
Development of Process
Industry sectors
Engineering Services
Management Consulting
Services
Control variables
Size LnSIZE
Export
Subsidiary rm
Correlations between
disturbances
2
3
4
5
6
7
8
(+) Indicates positive impact; () indicates negative impact; (NS) indicates non-signicant impact.
trademarks, 41.0% on copyrights, 77.0% on condentiality agreements, 53.8% on secrecy, 37.6% on complexity of
designs, and 60.1% on lead-time advantages over competitors. Overall, these descriptive ndings are consistent with
the results of studies on the frequency and extent of use of
legal as well as informal protection methods in the manufacturing industries.
Contrary to prior studies that have examined the use
of protection mechanisms as separate mechanisms, this
paper estimated a Multivariate Probit model to take into
account the fact that KIBS simultaneously make use of various alternative IP protection methods when protecting
their innovations. Positive signicant correlations between
equations suggest that various IP protection methods are
used by establishments as sets of complementary protection methods. More specically, the results show that
patents, registration of design patterns and trademarks
are three complementary legal methods on which KIBS
rely. Furthermore, secrecy and lead-time advantages over
competitors are two informal protection methods that
exhibit complementarities. Additionally, patents, registration of design patterns, trademarks, secrecy and lead-time
advantages over competitors constitute legal and informal
methods that are used jointly. These complementarities
suggest that IP protection mechanisms that are interdependent and reinforce each other to protect innovations
from imitation by rival establishments constitute a pattern on which rms rely to protect their innovations from
imitation. These results shed light on a much larger number of patterns of complementarities than predicted by the
Hypotheses 14 derived from the conceptual framework
of the paper. Contrary to expectations, there are patterns
where only legal mechanisms are complementary, other
cases in which only informal mechanisms are complementary, and nally, still other patterns where a combination of
legal and informal mechanisms are complementary. These
results suggest that patterns of complementarities upon
which KIBS rms rely are much more diversied and much
more complex than predicted by the existing conceptual
framework. In itself, this result suggests that more elaborated conceptual frameworks will need to be developed.
A second way of approaching Hypotheses 14 on complementarities is to take into account a second pattern
which is based on protection mechanisms that are used as
substitutes to protect innovations from imitation by other
rms. More specically, this substitution pattern is based
on the fact that KIBS rely on patents and complexity of
designs as substitutes, and use registration of design patterns and complexity of designs as substitutes in order to
protect their innovations from imitation. Thus, there is a
very limited number of substitution patterns. One informal mechanism and two formal mechanisms are substitute
for each other. In itself, this result suggests that protection
mechanisms play different roles in the protection of service
innovations from imitation, otherwise, a larger number of
substitution patterns may have been found. These results
might also suggest that the tacit and intangible nature of the
KIBS induce them to rely on a combination rather than on a
substitution of protection mechanisms to prevent imitation
from rival rms.
Hypotheses 14 were also approached under the perspective of a third category of patterns which is made up of
all the protection mechanisms that are independent from
each other and do not exhibit any synergy. This last pattern
is composed of various pairs of protection mechanisms. In
fact, results show that patents and condentiality agreements are independent; registration of design patterns,
condentiality agreements and lead-time advantages are
independent; trademarks, secrecy, complexity of designs,
and lead-time advantages are independent; copyrights,
secrecy, complexity of designs and lead-time advantages
are independent; secrecy and complexity of designs are
independent; and nally, complexity of designs and leadtime advantages are independent. Thus, there is a rather
large number of patterns in which different protection
mechanisms are independent from each other. This result
suggests that different elements of service innovations are
independent from each other and need to be protected by
different mechanisms that are also independent from each
other. Once more, these results suggest that managing the
protection of inventions and innovations in KIBS rms is
much more complex than predicted by the current conceptual frameworks.
The results of the Multivariate Probit model also suggest
that these various patterns of complementarities, substitution and independence cannot be adequately explained
only with the degree of knowledge codication and output tangibility. The results of the econometric models
show important differences in the determinants of the
1543
different methods of IP protection and their associated patterns. For example, the reliance on protection mechanisms
that are part of the complementary pattern tends to be
explained by a small number of common factors, namely,
R&D investments, development of process innovation, size
of establishments and the fact that establishments operate
in Computer System Design Services. The reliance on the
protection mechanisms that make up the substitution pattern is explained by an even smaller number of common
factors: R&D and process innovation for the substitution
between patents and complexity of designs, and product
and process innovation in combination with the fact that
establishments operate in Computer System Design Services for the substitution between registration of design
patterns and complexity of designs. Finally, the reliance on
the mechanisms included in the group of independent IP
protection mechanisms is explained by very heterogeneous
factors. In themselves, these results suggest that protecting
service innovations from imitation by rivals involves complex theoretical and empirical issues that call for additional
research.
Let us now review and discuss more precisely the extent
to which the other hypotheses derived from the modied
Howells et al. conceptual frameworks are supported by
the results of the statistical analyses. Hypotheses derived
from the conceptual framework predicted that increasing
R&D intensity contributes to increase the reliance of KIBS
rms on patents (Hypothesis 5) and on the registration of
design patterns (Hypothesis 6). The results of this study
show that as KIBS become more R&D intensive, they tend
to rely not only on patents, but on the complementarities of a large variety of legal and informal mechanisms:
patents, trademarks, complexity of designs, secrecy, and
lead-time advantages over competitors. Therefore, R&D
intensity does not induce KIBS to rely on legal rather than
informal protection mechanisms, but instead to rely on the
complementarities derived from the use of a large variety
of legal and informal mechanisms. This unexpected nding
may be explained by the fact that R&D activities conducted
by KIBS rms might generate outputs that are less codied
and less tangible than predicted in the conceptual framework.
We hypothesized a positive relation between KIBS
knowledge management strategies and patenting
(Hypothesis 7). The results of the statistical analyses
did not support this hypothesis. Instead, they suggest
that different types of knowledge management strategies
are related to the use of different types of protection
mechanisms. Hence, External Knowledge-Sharing with
Research Organizations is related to the use of trademarks,
copyrights and secrecy, while External Knowledge-Sharing
With Market Organizations is related to the use of copyrights and lead-time advantages over competitors. The
third knowledge management strategy tested in this
study, KIBS internal knowledge-sharing, is related to the
use of copyrights, condentiality agreements, lead-time
advantages and complexity of designs. Finally, KIBS
knowledge-development strategies are negatively related
to the use of copyrights, secrecy, complexity of designs
and lead-time advantages. Once more, these unexpected
results suggest that explaining the mechanisms upon
1544
point to the relevance of differentiating new technologybased services from traditional professional services. They
also suggest that engineering consulting services constitute
an intermediary KIBS category.
The results regarding the hypotheses related to the control variables are also mixed. Hypothesis 10 predicting that
the reliance on legal protection mechanisms increases as
KIBS size increases was largely conrmed by the results.
However, the relation between export and the reliance
on legal mechanisms (Hypothesis 11) was not conrmed.
Indeed, we found no signicant relation between export
and the use of legal mechanisms, but positive relations
between export and three out of the four informal protection mechanisms included in this study. Finally, the
hypothesis derived from the literature on manufacturing
rms that predicted that subsidiary rms are more likely
to rely on informal rather than formal protection mechanisms (Hypothesis 12) was not conrmed. We even found a
positive relation between subsidiary KIBS rms and the use
of patents. The hypotheses regarding the control variables
were derived from studies on the manufacturing industry, and the fact that two of them were not conrmed
might suggest that the differences between the knowledgeintensive-based business industry and the manufacturing
industry are very real and justify different approaches and
hypotheses.
The results of this study carry important implications
for future research. They suggest that the degree of knowledge codication (or tacitness) and output tangibility (or
intangibility) have profound impact on the selection of
the mechanisms that KIBS rely on to protect their inventions and innovations from imitation by rival rms. Overall,
the results of this exploratory study suggest that the two
questions related to How KIBS rms combine different
mechanisms to protect their inventions and innovations
and What factors explain these combinations should
receive more attention in future research. The current conceptual frameworks are not very successful to predict the
behaviour of KIBS rms with respect to the mechanisms
they rely on to protect their inventions and innovations.
Hence, more conceptual work is required in this area. Furthermore, more empirical work is needed in order to test
the hypotheses of the conceptual literature in order to
generate more useful insights for the management of innovation by KIBS.
What do these results suggest in regard to the management of the protection of innovations by KIBS? The
existence of complementarities between some protection mechanisms suggests that KIBS derive benets from
the reliance on complementary protection mechanisms.
Failure to recognize complementarities between patents,
registration of design patterns, trademarks, secrecy and
lead-time over competitors may lead to the underexploitation of synergies and the under-protection of
innovations from imitation by rival rms. Thus, managers and policy makers should pay attention not only
to patents, but also to the other protection mechanisms
that complement the use of patents to protect innovations from imitation. Moreover, failure to recognize
substitution between some mechanisms, patents and registration of design patterns with complexity of designs,
may lead to overestimating the contribution of some mechanisms to the protection of innovations. Managers and
policy makers should take into account substitution effects
when they invest resources in the protection of their
innovations.
Overall, the results of this paper show that KIBS do
not consider protection methods of innovation in isolation.
They examine several methods by considering how they
may be interdependent, substitute, or independent from
each other. Results in this paper account for the choices
made by managers of KIBS and do not address the issue
of the effectiveness of the different protection strategies.
Above all, the results of this paper should be considered
as exploratory in an area where empirical studies are still
very scanty. In particular, this exploratory study carries
two limits that need to be pointed out. The rst limit
is that the study did not include KIBS with less than 15
employees. Therefore, the results of this study cannot be
generalized to small KIBS. However, a large sample of rms
was well suited for a study on appropriation mechanisms
of innovations. Moreover, the sample of rms included
in this exploratory study was limited to three industries,
namely, management consulting, engineering consulting
and Computer System Design Services. These three industries represent an interesting sample of KIBS with two
cases associated with new technology-based services and
a third case associated with traditional professional services. The results shed light on very signicant differences
between these three sectors. These differences suggest
that other industries should be studied before generalising our results to all knowledge-intensive-based service
industries.
Table A1 (Continued.)
Items
Communalities
0.559
0.660
0.498
0.504
Chronbachs Alpha
Appendix A
See Tables A1 and A2 .
Chronbachs Alpha
0.87
0.55
Communalities
Item score
0.646
0.799
0.786
0.503
0.594
0.581
0.635
0.779
0.693
59.24%
1.75
0.67
Table A2
Correlations between continuous explanatory variables
Variable Tolerance
statisticsa
SrR&D IKS
SrR&D
IKS
EKSRO
EKSMO
KDSI
LNSIZE
Table A1
Test of constructs unidimensionality and internal reliability coefcients
(Chronbachs Alpha) for variables including multiple-item scale
66.92%
2.36
0.71
Chronbachs Alpha
Item score
Acknowledgements
Items
1545
0.846
0.865
0.897
0.877
0.799
0.893
0.269 0.155
1
0.247
1
0.168
0.285
0.384
1
LNSIZE
0.030 0.132
0.218
0.106
0.246 0.069
0.210
0.104
1
0.148
1
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