Firms’ ability to innovate and protect the fruits of their R&D investments is of ever-increasing importance in a world
of fast-paced competition and imitation. With regard to protection, R&D
managers are normally faced with the choice between keeping innovations secret and
filing for patents. Compared to secrecy, patents have the distinct advantage of
Patents are costly, they imply the disclosure of the innovation, the timespan
of protection is limited, and depending on the technology, it might be easy to
innovate around them. In practice, these limitations entail that firms often
choose to file for patents only when they have serious concerns about their
ability to keep an innovation secret.
However, despite all the flaws, a new study
by Eduardo Melero and Neus Palomeras from UC3M Business, and David Wehrheim from
IESE Business School, shows that patent benefits might extend beyond the legal
protection of innovations and result in increased employee retention. In their
forthcoming article in Management Science, the authors provide evidence that
obtaining patent protection decreases the chance that the inventors associated
with the innovation leave the firm by as much as 23%. Increased retention
improves the firms’ ability to capture the value generated by investments in
strategic human capital. Furthermore, it also reduces the chances that firms
will suffer from negative knowledge spillover to competitors.
The full article is available at the link
below: