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An Organizational Perspective on Patenting and Open Innovation

Forthcoming, Organization Science

44 Pages Posted: 18 May 2012 Last revised: 3 Jan 2014

Ajay Bhaskarabhatla

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Erasmus Research Institute of Management

Deepak Hegde

New York University (NYU) - Leonard N. Stern School of Business

Date Written: October 3, 2013

Abstract

A change in US patent law in the early 1980’s increased the value of patents, particularly for firms in the electronics and semiconductors industry, yet many of the industry’s leading firms did not embrace patenting after the change. We show through an in-depth study of International Business Machines (IBM), the world’s largest patentee, that the company’s practices during much of the 80’s discouraged patenting. IBM adopted pro-patent management practices in 1989 after the installation of a new R&D head and in the face of faltering financial performance. IBM’s increased patenting and licensing activities improved its financial bottom-lines but curtailed its industry-wide knowledge spillovers. These causes and consequences of pro-patent practices are visible in several other large US corporations. Thus, in the context of the “patent explosion” of the 1980’s, we show that intraorganizational forces such as inertia, financial pressures, and new leadership shaped established firms’ uptake of pro-patent management practices and their success. Our findings also suggest that pro-patent practices associated with “open-innovation” may stem the free flow of knowledge across organizational boundaries.

Keywords: intellectual property, patents, management, open innovation

JEL Classification: O31, O32

Suggested Citation

Bhaskarabhatla, Ajay and Hegde, Deepak, An Organizational Perspective on Patenting and Open Innovation (October 3, 2013). Forthcoming, Organization Science. Available at SSRN: https://ssrn.com/abstract=2061924 or http://dx.doi.org/10.2139/ssrn.2061924

Ajay Bhaskarabhatla

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands
+31 10 408 1004 (Phone)

HOME PAGE: http://people.few.eur.nl/bhaskarabhatla/

Erasmus Research Institute of Management ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+31 10 408 1004 (Phone)

HOME PAGE: http://www.erim.eur.nl/people/ajay-bhaskarabhatla/

Deepak Hegde (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
New York, NY NY 10012
United States

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