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Aleck Ncube
SMALL to medium scale enterprises (SMEs) are global drivers of technological innovation and economic development. Their importance has been somewhat eclipsed by the mega-multinational corporate entities.
SMEs represent the deep, broad, fertile forest floor that nourishes, sustains and regenerates the global economic ecosystem and in Zimbabwe this is not an exception. Broadly recognised as engines of economic and global development, SMEs account for a substantial proportion of entrepreneurial activity in both industrialised and developing countries.
In many developing countries, SMEs are known to employ more than 50 percent of workforce. SMEs are the building blocks of innovation and sustainable growth in developing countries and they represent technological creativity that can alleviate real poverty hence, as SMEs development drives growth, there is a concomitant reduction in poverty.
SMEs propel long-term growth by facilitating innovation and its diffusion across local, national, regional and international economies. Innovation immediately begets intellectual property (IP) and the concomitant urgent need to address intellectual property rights (IPR).
To realise the maximum value of innovation, SMEs need to recognise, understand and manage IP in order to protect their IPR and thereby accelerate their innovations towards commercialisation.
This will, in turn, not only improve their revenue flows, but also ultimately raise the standard of living in their respective countries. IP is thus the essential link in the economic/technological development chain, between creativity/invention, on the one hand, and innovation/commercialisation, on the other.
SMEs in Zimbabwe face a number of needs and challenges with respect to IP, IPR and its management. This involves efficient utilisation of assets, resources and capital, of which the human/intellectual aspect becomes increasingly important in the global knowledge economy.
SMEs need to recognise the reality and indeed necessity of economies of scale.
This will require sophisticated understanding of innovation networks, IP management and global economic opportunities, which they can strategically use to drive development.
Challenges facing SMEs in the global economy
As the pace of globalisation increases, SMEs need to recognise the value of IP as information, a tool and an asset. SMEs need to learn how to optimise IP management to sustain and foster growth. IPR enable SMEs to have exclusivity over the exploitation of their innovations. Exclusivity confers control and creates an incentive for investment, collaborations, licensing and thereby provides a solid business platform for advancing a coherent global strategy.
SMEs face significant risks because they often have fewer resources and limited expertise in IP issues when compared to the larger multinational corporations.
The effective management of IP is crucial for identifying useful knowledge and for capturing the value of an SMEs’ IPR. It is imperative for SMEs to take steps towards a professional and sound IP management capacity and capability. Broadly speaking, SMEs must recognise the critical importance of IPR in their business strategy. For example, SMEs need to understand the enormous value of patent information. Currently, there is still a lack of understanding and appreciation of this resource. Challenges include:
– A lack of understanding of the use of patent information as a business tool;
– Low levels of sophistication as to how to access/mine patent information;
– Lack of knowledge as to where to access patent information;
– Inadequate level of expertise needed to be able to extract and apply the information;
– Lack of appreciation of patent information as an enormous source of technical information.
The one major challenge for SMEs is IP management, including the capacity to effectively access and manage and then exploit critical business, technical and legal information, e.g, patent information.
SMEs need to connect to, develop and integrate into global innovation networks. Sourcing of knowledge and capacity across the globe will consolidate research and development, focus innovation, lower transaction costs and advance product commercialisation.
One particularly attractive model for integration of SMEs into the knowledge economy of developing countries is a hub and spokes arrangement, whereby the hub is a national research institute or university and the spokes are SMEs which serve as innovation conduits moving basic research and development towards practical commercial development and, ideally, global commercial distribution.
IP, or to be more specific IPR, is increasingly seen as a currency for facilitating and accelerating international technological transactions. For SMEs, embracing innovation will involve shifts in managerial culture; implementing a pro-active strategy towards management and maximisation of value for IPR is fundamental.
This will not occur spontaneously; building a culture of innovation requires rewarded teamwork and organisational changes that foster internal and external collaboration. This requires risk taking.
SMEs must recognise that risk is manageable, that potential rewards can be enormous if they take a global perspective.
The Way Forward (Strategies, Tactics, Options)
Ecosystems of innovation link global networks with people, institutions (universities, government agencies, etc.) and other companies, in their own or different countries, to solve problems, source knowledge, generate ideas and drive innovation. SMEs can maximise their potential via bold, yet careful, integration into these ecosystems.
Pragmatically, SMEs can implement this by appropriate tactical implementation of their global strategies. Tactical implementation involves specific application of techniques to manage IP, build networks and move products into the stream of commerce.
IPR provide a basis for businesses to: prevent others from copying their products or using their innovations — this is particularly relevant in today’s competitive markets; create a strong brand identity — by product differentiation through the strategic use of one or more types of IPRs; obtain valuable competitive intelligence — analysing commercial and technological information from patent, trademark and design databases can increase a company’s understanding of technological fields and trends; identify future research and growth areas; and analyse competitors, thereby saving research/development/marketing time and resources; gain revenues through licensing, franchising or other IP transactions; obtain financing or venture capital — IP assets which have legal protection and can be valued can be leveraged to obtain capital.
The role IP plays in a business can vary depending on different factors such as: the business model — some models will have IP as a key element while IP may play a less central role in other models.
Different types of IPRs will also be relevant to different business models e.g. patents, know-how and trade secrets will be central to technology companies, while trademarks and designs will be more important to consumer brand sector; the market — different tools for protecting IP assets will be relevant according to market conditions such as the length of product cycles, the risks of IPR infringement by competitors and the effectiveness and cost of enforcement of IPRs against competitors; the type of IP used — different types of IPRs play different roles (e.g. trademark protection will be used to protect brands; patents to protect technology; copyright to protect software; design rights to protect new designs).
Most businesses will utilise more than one type of IPR.
The level of understanding of how to manage and commercialise IP varies between companies, though small and medium-sized enterprises (SMEs) in particular lag behind in this area. It is essential for businesses and their advisors to understand that legal protection of IPRs in itself is not sufficient and that a successful IP management strategy has to integrate the role of IP in the wider business context.
Mr Davies Ndumiso Sibanda
derick.khumalo
Online Reporter