Intellectual Property Rights and the Financing of Technological Innovation
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Intellectual Property Rights and the Financing of Technological Innovation

Public Policy and the Efficiency of Capital Markets

Carl Benedikt Frey

Following the transition of industrial nations to knowledge economies, the financing of technological innovation has become a central issue in public policy, corporate finance and business management. This detailed book examines the role of intellectual property rights in facilitating the financing of technological innovation as well as the role of policy makers, investors and managers in this process. The book’s central finding is that public policy plays a key role in promoting the corporate disclosure of intellectual property-related information to enhance the efficiency of capital markets. This not only reduces the costs of capital for technology-driven firms but ultimately spurs innovation and economic growth.
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Chapter 4: IPR management and company valuation in the pharmaceutical industry: an exploratory study

Public Policy and the Efficiency of Capital Markets

Carl Benedikt Frey


This chapter examines pharmaceutical firms’ IPR management by means of exploratory interviews. A qualitative empirical approach was chosen in order to further specify the IPR management term and its dimensions. Moreover, research shows that industries differ according to whether they are dominated by discrete or complex technologies, and this is reflected in companies’ patenting behaviour (see, for example, Levin et al., 1987; Arundel and Kabla, 1998; Cohen et al., 2000). While firms in discrete technology fields patent to protect their products from imitation, companies in complex technology fields rely more on strategic patenting (see, for example, Cohen et al., 2000; Hussinger, 2006). However, recent research reveals that strategic patenting has extended across technology fields (see, for example, Blind et al., 2006). Notably, a recent inquiry by the European Commission (2009) has shown that pharmaceutical firms develop more complex IPR strategies to enhance their financial performance. Unfortunately, however, the inquiry did not provide any holistic conceptualisation of how they do so. The objective of the present exploratory study was therefore to develop a conceptual framework for how pharmaceutical firms conduct their IPR management to serve as the basic foundation for the operationalisation of IPR management indicators in the quantitative empirical study that follows (see Chapter 5).

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