Collaborative Intellectual Property Strategies for High Technology Manufacturing Small and Medium Enterprises operating from New Zealand

Abstract

High Technology Manufacturing is one of the fastest-growing sectors of the New Zealand economy and Small and Medium Enterprises (SMEs) represent a majority employer within that sector. Therefore the growth of this sector is an economic and policy priority for the New Zealand Government. This study focuses on a specific and important aspect of New Zealand HTM SME operations, the process of knowledge management in strategic alliances. Knowledge-based assets form the basis of competitive advantage for HTM SMEs but the near zerocost nature of knowledge transferability leads to the ability of partners to acquire knowledge without having paid for it. This concept is known as the Paradox of Openness and can be managed with Intellectual Property Protection Mechanisms (IPPMs), such as patents and trade secrets. The management of the Paradox of Openness has not been investigated in the unique context of New Zealand’s HTM SME strategic alliances, despite the uniqueness of this context. This gap in existing literature was addressed with a qualitative multiple case study approach suited to the novelty of context. 12 semi-structured interviews with 5 industry experts and 7 SME senior managers were conducted over the period of 3 months with associated secondary data for triangulation. Analysis of SME data through a modified form of grounded theory coding resulted in the emergence of two distinct models of IP management differentiated on market size and product complexity. Participant HTM SMEs largely confirmed existing theory while also adding the exploratory insight that the larger their target market and the more development their product required, the more likely they were to seek out a large established overseas firm to form a strategic alliance with. This would result in the loss of the lion’s share of knowledge-based appropriability overseas with the large firm providing both development and commercialisation knowledge and capabilities. By adopting a knowledge-based perspective, this exploratory study has identified that the loss of New Zealandoriginated knowledge-based appropriability could contribute to New Zealand’s Productivity Paradox. Therefore these findings have potential policy implications as existing literature focuses on supporting research rather than growing development and commercialisation knowledge and capabilities.