Institutional Contexts, the Management of Patent Portfolios, and the Role of Public Policies Supporting New EntrepreneurialVentures

This chapter aims to increase our understanding of the relationships between firm strategies, the design of institutional contexts on behalf of public agents, and the stimulation of diffused entrepreneurship within the economic system. In particular, it analyzes the way in which firm patent portfolio management strategies may systematically hinder the emergence of entrepreneurial endeavors within the economic system and, on this basis, critically discusses how the acknowledgement of these interactions should influence the design of public policies at the economic system level. We argue that in economic contexts where intellectual property rights (IPR) are influential, large firms may intentionally develop and strategically manage wide portfolios of patents in order to purposely pre-empt the rise of direct competition and thwart the efforts of new potential entrepreneurs, rather than merely to protect the fruits of their R&D. The chapter suggests an important and counterintuitive argument: although patents are institutional mechanisms typically designed with the intention of motivating economic agents to create value for the society they belong to by adopting entrepreneurial behaviors (and as such receive favorable treatment in public policies), they may also be strategically used by large firms as an offensive barrier to entry or to imitation by potential competitors. In the latter case, given the motivation underlying the request of these IPRs, the protected new resource combinations often remain unexploited, as neither the patenting firm nor other firms proceed to implement the ideas contained in the patent. These firm behaviors therefore prove to be detrimental, not only to the emergence of new entrepreneurship, but also to the evolution of the economic system.