The study and its conclusions in brief

The research behind the book ‘Intellectual Property Rights Management – Rookies, Dealers and Strategists’ (Palgrave Macmillan 2015), provides a unique insight into the relation between companies’ use of IPR and their financial performance. The book presents the differences between IP archetypes measured against various key figures using different methods. In the following, we present the main conclusions on the financial effect of the IPR approach of a company. 

The company type affects the financial performance

When comparing one group of companies to another it is usually difficult to distinguish the factors that cause a difference between the two in performance. In this analysis the researchers had access to a data set comprising of both a large number of companies and a lot of information about these companies, for example number of employees, types of employees, number of IP rights and industry affiliation. This enabled the researchers to use a robust methodology (matched sample analysis) to determine that the differences in financial performance (revenues, gross profits, profits before tax and value added) can be attributed to the differences in IP management practices of the companies. 

Selected findings

  • The companies in the analysis have a varying number of patents, trademarks, design rights and utility models. The conclusion is that it is not the number of rights but how the companies use the rights they have that has an effect on the revenues.
  • Companies that have a strategic approach to IPR and/or engage in trading IPR (Dealers, Strategists and Strategic Dealers) have higher revenues than the companies that do not have any of those behaviours (Rookies).
  • Strategic Dealers and Dealers perform better than Strategists on all the measured parameters and Strategic Dealers perform even better than Dealers on some parameters. 

Overall, the conclusion about company IP type and financial performance is that the Rookies exhibit the lowest performance followed by the companies that have no IPR considerations at all  [1]  . Next in line are the strategists, who have a strategic approach to IPR but have chosen not to trade. The best performance is observed in the Dealers and Strategic Dealers, with the Strategic Dealers performing slightly better than the dealers  [2]  .

It can thus be concluded that there is a clear-cut advantage in belonging to the groups that trade IPR. This advantage is even greater if the company also has a strategic approach to IP management. If a company neither trades IPR nor has a strategic approach, it is not an advantage to own many IP rights. If the company belong to one of the groups with the poorest performance, the analysis show that it is more important to focus on trading IPR than developing a strategic approach. But the interviews that support the analysis suggest that it takes time to change the IPR approach of a company and that strategic considerations about IPR can also encourage the company to focus on trading IPR. On this basis, the researchers recommend that the companies in the low performance groups work on both a strategic IPR approach and look into the opportunities in selling, buying and licensing IP rights.    

If you are interested in knowing more about the research findings, we recommend reading the book ‘Intellectual Property Rights Management – Rookies, Dealers and Strategists’ (Palgrave Macmillan 2015).

[1]  The study includes a large group of companies which answered “not relevant” to all questions about IP management and trade. They are referred to as “IP-inactives” in the study since they have very few IP rights compared to the other archetypes. The group accounts for approximately 50% of companies in the study sample.

[2] The analysis is a one-on-one comparison between the company groups for each of the financial measures. Thus the Dealers and Strategist, for example, can perform better than Rookies when it comes to revenues, while only Dealers perform better than Rookies when it comes to profits before tax. The ranking is done by looking at which types most frequently outperform others. Strategic Dealers rank higher than Dealers because they outperform the other types with a higher significance.