Small firms and patenting revisited. Research Paper No 85
Published: 21 February 2020
In order to observe a patent application at the firm level two conditions need to be met: new products need to be of patentable quality, which depends both on the degree of novelty of innovations and on the total number (portfolio) of innovations; and the benefits of patents need to be higher than the costs of owning them. Analyzing the patent propensity of small and large UK firms using a novel innovation-level survey (the SIPU survey) linked to Community Innovation Survey data we find that when we consider the whole innovation portfolio smaller firms do patent less than larger firms. However, using data on individual innovations, we find that smaller firms are no less likely to patent any specific innovation than larger firms. We argue that size differences in the probability to patent relate primarily to the ‘portfolio effect’, i.e. larger firms generate more innovations than smaller firms and therefore are more likely to create one or more which are patentable. As for the decision to patent a patentable innovation, we find that cost barriers, more than issues of innovation quality or enforceability, deter small firms from patenting specific innovations. Measures to address the costs of patenting for smaller firms – perhaps by considering patents as eligible costs for R&D tax credits – and/or subsidizing SMEs’ participation in IP litigation schemes may both encourage patent use by smaller firms.
This report presents new information on the ambitions, growth aspirations and innovation levels of Irish micro-businesses.
Micro businesses, typically businesses with 9 employees or less, play an important role in stimulating innovation, employment and growth. Despite this, relatively little is known about this important segment of the business population as such businesses are often excluded from official surveys. This report presents the findings of a survey conducted on micro-businesses in Ireland.
Ambition plays an important role in ensuring businesses achieve their full potential. The survey conducted during the course of this project reveals that one in four micro-businesses in Ireland want to build a national or international business. Within Ireland, micro-businesses in the West are amongst the most ambitious nationally. Interestingly, however, business and personal ambitions are broadly similar for male and female micro-businesses owners. For many people flexibility is a key personal motivator for running their own micro-business.
This report provides the first detailed information on the uptake of digital technologies by micro-businesses in Ireland. The results suggest that Irish micro-businesses perform well, adopting digital technology at a faster rate than their counterparts in the UK and particularly the USA. Micro-businesses in Ireland also compare well internationally with respect to introducing new or improved products and services. Finally, the report emphasises the importance that micro-businesses, due to their scale and access to technology, should not be left behind larger businesses in the global digital revolution.
This report describes new and unique survey data on established micro-businesses with 1-9 employees in Ireland. The report focuses on the ambitions – business and personal- of the owners; as well as innovative activity and the uptake of digital technology within micro-businesses. In Ireland, most micro-businesses are mature, and many are home-based. They are closely related to the families which own and run them.
This report represents a collaboration between University College Cork and the UK Enterprise Research Centre. Views in the report are those of the authors alone and do not necessarily reflect those of the sponsoring organisations.
Published: 3 April 2019
Enterprise Research Centre
Warwick Business School
University of Warwick
Coventry CV4 7AL
Enterprise Research Centre
Aston Business School
Birmingham B4 7ET
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