In the industrial age, it was assumed that economies of scale would enable vertically integrated large enterprises to emerge as permanent winners in the competitive marketplace of a globalized economy. As the 20th century progressed, with the emergence of the knowledge economy, it became increasingly evident that not only were the small and medium enterprises were not going to disappear but, worldwide, in most countries, the enterprise sector would be largely comprised of small and medium enterprises (SMEs) and even smaller enterprises.
In the second half of the 20th century, slowly but surely, the innovative and creative SMEs have played and, in the 21st century, will increasingly play a more central role in sustainable economic development, as SMEs are major contributors to employment generation and sustainable wealth creation.
In the emerging era of “open innovation” enterprise enter into multiple collaborations. That is, they operate in networks of cooperation, in which competitors also are partners. This is becoming necessary for creating newer, better and/or cheaper products and that too at a faster pace in an ICT-enabled environment, which encourages cross-border partnerships in the framework of networks, consortia, strategic alliances, franchising and the like. While the initiative for “open innovation” has hitherto come mostly from multinational and large enterprises, which have sought access to cutting edge innovations from outside, especially from start-ups and SMEs, SME policy makers and the SMEs themselves are beginning to engage in “open innovation” by proactively seeking solutions to their challenges in partnership with research universities and larger enterprises, including multinationals.
Amongst the prerequisites for “win-win” partnerships are included:
- negotiating skills to get a fair deal, and
- access to bargaining chips for negotiating leverage.
While SMEs increasingly rely on human creativity and inventiveness to create useful innovations, yet, in the knowledge-driven economy of our times, most SMEs in most countries are not aware of the central role of the intellectual property system (IPR) system as bargaining chips as well as for safeguarding and leveraging their innovations. Those SMEs which are aware of the role of the IPR system do not have in-house resources or the managerial capacity to make effective use of the tools of the IPR system in their business strategies. Even medium-sized enterprises are generally too small to have an in-house intellectual property expertise. When such units exist, the staff members are not well trained in IPR matters and thus are not able to liaise effectively with external IPR experts and other IPR service providers in the private sector. More often than not, the SMEs wake up to the reality of the IPR system only when they are faced with a dispute or legal conflict over IPRs. This happens, for example,
- when pirated and counterfeit products appear on the market, affecting their image and/or market share, or
- when an SME is hauled up for trampling upon the intellectual property rights of others, that is, knowingly or unknowingly using IP assets without permission of their owner(s).
Problems escalate when an SME finds itself up against a large company or a multinational firm with deep pockets, greater IPR knowledge/skills and better access to the IPR system. Sometimes, even when the SMEs are “in the right”, the SMEs find themselves caught up in a battle of attrition, which they are destined to lose when they are up against a much larger competitor having the resources to withstand the costs of a lengthy, costly, and uncertain legal battle. In other words, the IPR system is often abused by such larger players, which an SME, given its very structural weaknesses, can only succumb to. In short, it may be surmised that most SMEs find it difficult, if not impossible, to resort to the tools of the IPR system for protecting their innovative new and improved products and services from domestic and international counterfeiting, or even in a dispute with larger enterprises or international groups.
Many of the challenges faced by SMEs, such as those alluded to above, require to be studied systematically and researched objectively, with the research findings validated, verified and supported by empirical investigation of the ground realities. A systematic analysis of the ground realties must be informed by both a business as well as an economic perspective so as to guide the policy makers in the government, private sector and civil society to ensure that SMEs and even smaller enterprise are not at an undue disadvantage vis-à-vis the larger enterprises when it comes to access to and effective use of the tools of the IPR system for enhancing their competitiveness in the domestic and export markets.
Given the basic similarities in the ground realities in different national jurisdictions, it is important to develop a shared approach to the collection of information and data and the tools/methodologies to be employed to study of the challenges faced and then present the findings that enable comparisons across countries and over time that are robust and valid. This calls for international cooperation to develop common survey tools and data collection and analysis tools, based on internationally accepted best practices for conducting such studies and their analysis. The chosen best practices will, however, have to be adapted to local or national realities for creating appropriate/tailored national tools and strategies for undertaking national studies to document the challenges faced for creating awareness and building capacity on IPRs for benefitting SMEs in every country.