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The Intellectual Property Debate

Perspectives from Law, Economics and Political Economy

Edited by Meir Perez Pugatch

Intellectual property (IP) has become one of the most influential and controversial issues in today’s knowledge-based society. This challenging book exposes the reader to key issues at the heart of the public debate now taking place in the field of IP. It considers IP at the macro level where it affects many issues. These include: international trade policy, ownership of breakthrough technologies, foreign direct investment, innovation climates, public–private partnerships, competition rules and public health where it is strongly embedded in contemporary business decision making.
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Chapter 6: Intellectual Property Policies and Scale Neutrality: Strategic Management Implications for SMEs

Grant E. Isaac


Grant E. Isaac I. INTRODUCTION As the title of this volume suggests, there are many debates associated with intellectual property policies which can be assessed from legal, economic and political economy perspectives. Often, the unit of analysis for these debates is the nation-state level where the questions posed deal with issues such as the welfare gains and losses resulting from intellectual property policies as well as the governance of intellectual property regimes. Yet, given the fact that intellectual property policies are – to a large part – designed to encourage innovation among private organizations, adopting an organization-level unit of analysis is crucial. Doing so deepens the assessment of intellectual property policies by explicitly linking the legal, economic and political economy perspectives with the strategic management perspective. An important intellectual property policy debate at the level of the organization has to do with the scale neutrality of various intellectual property policy instruments such as patents. In a general sense, policy instruments that are scale neutral create symmetric strategic incentives for firms regardless of firm size (measured in terms of revenues and/or employees). Policy instruments that are not scale neutral create asymmetric strategic incentives for firms based on their size (Weidenbaum, 2004; Persson and Tabellini, 2000; Bernheim and Bagwell, 1988). Consider first scale-neutral policy instruments such as constituent policy instruments that are designed to level the playing field for all actors regardless of scale. Firm-level environmental regulations are often cited as an example of constituent policy instruments where polluters – regardless of size – must reduce...

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