Intellectual property management in the small and medium enterprise (SME)

Intellectual, as opposed to physical and financial, capital is increasingly regarded as a source of competitive advantage for individuals, enterprises and nations. Small and medium enterprises (SMEs) are often regarded as important innovators in the economy. It is possible to protect some intellectual capital as property through formal legal rights such as patents or copyright or through contractual agreements. Where small businesses possess such intellectual property, they can secure legal proection. Business owners may also attempt to protect such property using informal methods such as keeping information confidential as “trade secrets”. To explore whether SMEs possess intellectual property and, if so, whether they attempt to protect it, results are presented from a study of SMEs in four sectors where such issues are likely to arise – computer services, design, electronics and mechanical engineering. Overall, small business owners placed most emphasis on informal methods to protect intellectual property. These methods were more familiar, cheaper, less time‐consuming and frequently considered as effective as more formal rights. Under most circumstances, SME owners considered formal registrable rights such as patents less important. Even where business owners adopted formal rights, they were generally reluctant to bring a legal action to obtain redress where they believed that infringements had taken place.