IPR activity indicates the growth potential of SMEs

Small and medium-sized enterprises (SMEs) are often said to be the backbone of the European economy. However, a large proportion of their contribution to growth and new job creation is in fact generated by a small fraction of SMEs, which may be referred to as high-growth firms (HGFs).

Economists of the European Patent Office (EPO) and European Union Intellectual Property Office (EUIPO) have examined (1) the relationship between IP activity and the growth prospects of European SMEs.

Main findings of the study include that SMEs with prior IPR activities are more likely to grow than other SMEs. SMEs that have filed at least one IPR are 21% more likely to experience a subsequent growth period, and 10% more likely to become an HGF. Naturally the mere filing of IPR is not sufficient to trigger growth, but it indicates company ability and intention to sustain innovation-based growth, through IPR creation and exploitation.

One interesting finding was that European patent protection activity predicts particularly clearly likelihood of high growth for SMEs classified in low-technology domain (2). See Figure 1.

Figure 1. Increase in odds of high growth with prior use of a European patent

This well illustrates competitive advantage that a firm in a low-tech sector may gain by innovating.

Utilization of different IPR types supports SME growth potential as shown in Figure 2 (14.1% of all SMEs of the study had filed for trademark, and only 4.6% for patent).

Figure 2. Increase in odds of high growth with prior use of an IPR bundle

Besides trademarks as a fundamental tool especially for consumer-oriented industries, the study found also the prior filing of patents to be a significant indicator of future HGF potential. This also implies the importance of strategic use of the IPR toolbox – how to select the tools to protect a new product or service, taking into account the various affecting dimensions, such as associated business value versus costs, scope of protection likely available, presence and nature of markets and competitors, etc.

Our IPR experts assist to prepare an IPR strategy and optimized use of the IPR toolbox to support your company. We also review current IPR status, such as assessment of coverage of current technology and/or brand related IPR portfolio with respect to product/service offering. We have unique mixture of IPR consulting expertise, many of our attorneys have earlier IPR management experience within companies.

Take contact to our expert to review your IPR status and plan how IPR can fuel your growth.

References:

(1) High-growth firms and intellectual property rights, IPR profile of high-potential SMEs in Europe, May 2019, A joint project between the European Patent Office and the European Union Intellectual Property Office

(2) Eurostat classification, the low-tech domain including i.a. manufacturing of food products, beverages, textiles, wood products, paper products, and furniture