Strategic Action Repertoires and Performance of Firms in the Internet Industry

Researchers have called for new theoretical frameworks and empirical analyses to understand variations in organizational strategies and management practices in the Internet industry, where existing paradigms may have limited applicability. Studies to date have neither articulated the repertoire of key firm actions in this context nor developed theory to relate firm actions to performance. This paper seeks to identify a key set of firm moves in the Internet industry and develop a theoretical model to relate firm actions to two important firm outcomes: sales performance and firm survival. We draw on the construct of dynamic resourcefulness to the firm level and develop a research model linking the actions of firms in the Internet industry underlying dynamic resourcefulness to firm-level outcomes. We test our hypotheses using the action repertoire-year mode of analysis on the actions of 106 leading firms in the Internet industry over a period of 6 years from 1994 to 1999. Our results suggest that firm actions to manage and direct their intellectual, relational, and financial capital resources are associated with higher levels of performance and survival

117 Issues in Information Systems

ABSTRAC

Fundamentals of Software Patent Protection at a University

Software protection by patents is an emerging field and thus is not completely understood by software developers, especially software developers in a university setting. University inventors have to balance their publication productivity and the desire of their university to license inventions that could be profitable. This balance stems from the one-year bar on filing a U.S. patent application after public disclosure such as publications of the invention. The research provides evidence supporting the hypothesis that a university inventor can improve the protection of his or her software patent by applying certain information about patent prosecution practices and the relevant prior art. Software inventors need to be concerned about fulfilling the requirements of patent laws. Some of the methods for fulfilling these requirements include using diagrams in patent applications such as functional block diagrams, flowchart diagrams, and state diagrams and ensuring that the patent application is understandable by non-technical people. The knowledge of prior art ensures that the inventor is not reinventing the wheel, not infringing on a patent, and understands the current state of the art. The knowledge of patent laws, diagrams, readability, and prior art enables a software inventor to take control of the protection of his or her invention to ensure that the application of this information leads to improvements during the application process

Patent Portfolios

This article presents a new theory of patent value, responding to growing empirical evidence that the traditional appropriability premise of patents is fundamentally incomplete in the modern innovation environment. We find that for patents, the whole is greater than the sum of its parts: the true value of patents lies not in their individual worth, but in their aggregation into a collection of related patents, a patent portfolio. The patent portfolio theory thus explains what is known as “the patent paradox”: in recent years patent intensity—patents obtained per research and development dollar—has risen dramatically even as the expected value of individual patents has diminished. We find the benefits of patent portfolios to be so significant as to suggest that firms’ patenting decisions are essentially unrelated to the expected value of individual patents; because patent portfolios simultaneously increase both the scale and the diversity of available marketplace protections for innovations, firms will typically seek to obtain a large quantity of related patents, rather than evaluating their actual worth. The result—which we find widely recognized in commercial circles—is that the modern patenting environment exhibits (and requires) a high-volume, portfolio-based approach that is at odds with scholars’ traditional assumptions. The implications of the patent portfolio theory are important and widespread. First, the explanatory power of the theory allows resolution of not only the patent paradox, but many of the otherwise-puzzling observable patterns in the modern patenting environment—such as firm-size differences in patent intensity and litigation rates. Second, the patent portfolio theory neatly complements the prior theories that have sought to explain modern patent value, strengthening their relationship with the reality of patenting behavior—and confirming that the value of patents has expanded beyond traditionalist notions. Third, the patent portfolio theory allows a number of important predictive insights into future trends in the patent system, allowing policymakers and scholars to frame their inquiry within a range of likely outcomes. In our analysis, the patent portfolio theory does not suggest a better, brighter future for the patent system, but does build a foundation for the important academic and policy-related work that springs from this initial treatment