Knowledge Protection Practices in Innovating SMEs

Summary This paper examines the use of innovation protection mechanisms in small and medium enterprises (SMEs). By starting from a knowledge-based view the aim is to achieve a better understanding of how the role perceived by innovating SMEs of patent protection and the long-term retention of qualified personnel relates to different company-specific factors. Moreover, the interplay between patents and employee retention and their mutual interdependencies with other appropriation methods such as secrecy or lead time advantages are explored. This is because different knowledge protection practices must not only separately provide barriers to imitation, but may also reinforce each other as complements. In several ways, the results provide insights into some of the appropriation strategies taken by smaller firms. For example, a staff-related appropriation strategy seems to be essential for many SMEs because of their informal mode of learning and innovation characterized by experience-based know-how with strong tacit elements. A relatively strong complementary relationship has been observed between employee retention and the use of lead time advantages. The paper concludes with a discussion of the implications for policy and research.