Secrecy in global economy
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Article presented in WSKS 2009 conference
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Secrecy in global economy
- 1. Cultural Aspects of Secrecy in Global Economy Second World Summit on the Knowledge Society, WSKS 2009 Chania, Crete, Greece, September 16-18 Enric Serradell-Lopez; Victor Cavaller
- 2. Purpose • Why one company opt for the secret instead patenting. • Why some companies have more tendency to the secret than others. • What aspects of national culture could have more influence in the secret ? Enric Serradell-Lopez; Victor Cavaller
- 3. Theoretical discussion • Some aspects of Intellectual Property Protection: Formal and Informal Methods – Formal methods: patents, rights of property, commercial marks – Informal methods: secret, complexity of the design, and first mover advantage Enric Serradell-Lopez; Victor Cavaller
- 4. Formal mechanisms of protection • Patent or not to patent: – Sword of double edge – Naked ideas patent Enric Serradell-Lopez; Victor Cavaller
- 5. Informal mechanisms • Trade secrets • Lead-time strategy • Complexity of the design • Defensive publishing Enric Serradell-Lopez; Victor Cavaller
- 6. Management of the secrecy • The policy of the firms in relating to the secrets can be summarized in three points: - Making of secrets - The protection of secrets - The stealing of secrets (Dufresne and Offstein, 2008) Enric Serradell-Lopez; Victor Cavaller
- 7. Culture and Secrecy • Culture definition • National culture: Hofstede’s dimensions – Power distance – Individualism – Masculinity – Uncertainty avoidance Enric Serradell-Lopez; Victor Cavaller
- 8. Power distance The extent of power inequality among members of an organizational society. • Culture sets the level of power distance at which the tendency of the powerful to maintain or increase power distance and the tendency of the less powerful to reduce them will find their equilibrium. Enric Serradell-Lopez; Victor Cavaller
- 9. Uncertainty avoidance • Uncertainty avoidance: is the extent to which members of an organizational society try to avoid future uncertainty or ambiguous situations. Enric Serradell-Lopez; Victor Cavaller
- 10. Individualism • Cultural belief and social pattern that individuals should take responsibility primarily for their own interests and those for their immediate family. Enric Serradell-Lopez; Victor Cavaller
- 11. Masculinity • Highly masculine societies place low value on caring for others, cooperation and solidarity. Enric Serradell-Lopez; Victor Cavaller
- 12. Hypotheses • H1: Companies based in higher power distance countries exhibit higher level of secrecy. • H2: Companies based in lower uncertainty avoiding countries exhibit a higher level of secrecy. Enric Serradell-Lopez; Victor Cavaller
- 13. Hypotheses • H3: Companies bases in higher individualism countries exhibit a higher level of secrecy. • H4: Companies based in more masculine countries exhibit a higher level of secrecy. Enric Serradell-Lopez; Victor Cavaller
- 14. Data • Community Information Survey (CIS3) information • The classic Hofstede’s survey Enric Serradell-Lopez; Victor Cavaller
- 15. Measures • Dependent variable: Proportion of companies that use secrecy as a method to protect their innovations (Oslo guidelines) - New or improved products, process, marketing, or organisational method. • Explanatory variables: 4 dimensions of Hofstede’s survey Enric Serradell-Lopez; Victor Cavaller
- 16. Results Model 1 contains all the explanatory variables: Innovative and non Innovative companies. Global model not significant. Model 2: Innovative enterprises. Model 3: non innovative enterprises Enric Serradell-Lopez; Victor Cavaller
- 17. Enric Serradell-Lopez; Victor Cavaller
- 18. Conclusions • H1: Companies based in higher power distance countries exhibit higher level of secrecy. • H2: Companies bases in lower uncertainty avoiding countries exhibit a higher level of secrecy. Enric Serradell-Lopez; Victor Cavaller
- 19. Conclusions • H3: Companies bases in higher individualism countries exhibit a higher level of secrecy. • H4: Companies based in more masculine countries exhibit a higher level of secrecy. Enric Serradell-Lopez; Victor Cavaller
- 20. Conclusions • Masculinity affects in a direct form to the level of secrecy – Recognition in jobs is important – High job stress – Belief in individual decisions – Work very central in the person’s life Enric Serradell-Lopez; Victor Cavaller
- 21. Conclusions • Uncertainty avoidance has an opposite effect to the secrecy – Weak loyalty to employer: short average duration of employment – Preference for smaller organizations – Scepticism toward technological solutions – Innovators feel independent of rules – Power depends on position and relationships Enric Serradell-Lopez; Victor Cavaller
- 22. Limitations and future projects • Sample • More cultural index Enric Serradell-Lopez; Victor Cavaller
- 23. Thank you !!! Muchas gracias !! Comments, suggestions, questions... Enric Serradell-Lopez Open University of Catalonia, Barcelona, Spain E-mail: eserradell@uoc.edu Enric Serradell-Lopez; Victor Cavaller
Editor's Notes
- A study made by the American Society for the Industrial Security and PWC made some years ago estimated that 1000 thousand companies of the list Fortune lost 59 trilion dollars due to the robbery of intellectual property and commercial secret or property. The purpose of our work is to study the causes for which the companies opt for the secret insted of the patents.
- There two main methods of protection of intellectual property. The firts one: Formal methods: also called legal methods. Informal methods also called strategic methods In the decision process of the companies about patenting: We can consider two types of causes: economic and cultural
- A patent could be a sword of double edge. On one hand it can be an useful tool to explode and to protect the intellectual property, but it could be harmful if the company doesnt have the means to defend the patents in the tribunals. Normally companies should patent what we call “naked ideas”. That’s to say when the invention or innovation is easily observed in products or services. In other cases, when is not easy to observe them is possible to maintain the secret of the invention. This could be the case for example, of the process innovation. It’s true that all studies say that large companies have more tendency to patent that small companies.
- Later we well speak about Trade secrets Informal mechanisms are strategical. They have to be decided by the top managers of the company. Lead-time strategy: This strategy denotes a behaviour by which the company relies on being consistently more innovative than its competitors. Applying this strategy, the company always has an improved version of its products prepared for its launching before possible actions done by a competitor that has copied the available version of the product protected. New version of a software programe could be a good example of this kind of strategy. Complexity of the design: The composition and design of some products can be so complex that the competitors would incur in disproportionate costs to copy the product. As with the previous strategy, patenting process could show enough hints to other firms to reproduce the innovation. Defensive publishing: By means of this strategy the firm presents in public its inventions. This strategy can be applied when the firm considers that obtaining a patent can be too expensive, or too risky, and there are reasons to believe that other firms will be able to carry out processes of reversed engineering and patent it themselves.
- And this policy as to be followed by the innovative enterprises if they don’t want to lose their advantage. Under this point of view Knowledge management has to decide in every moment how information have to share and what information not.
- The objective of this article is about culture and secrey. Culture is defined as a shared set of values and beliefs. The culture of a company stablish the behaviours of the employees. But for this article we use the concept of national culture and its four dimensions, following Hofstede’s work. These four dimensions provide a framework not only for analyzing national culture, but also for considering the effects of cultural aspects on management and organization. It can be specially useful for understanding the appropriate mechanisms in coordinating activities inside organizations. First of all, some definitions
- Cooperation is considered a sign of weakness
- Departing from the prevous definitions we can formulate the next 4 hypotheses
- Survey of 15 european union countries, plus Iceland and Norway
- In order to make some statistical studies. Dependent variable: Each item represent the proportion of firms on each country that use secrecy as a method to protect their innovations. We have used Oslo Guidelines for the definition of innovation: An innovation is the implementation of a new of significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices. The requirement is the new product or process must be new (or significantly improved) to the firm.
- We have built three models using ordinary least squares regression models
- R squared = 30 % - 36 % Economic factors has a weight between 60 % - 70% in the decision to maintain the secret.
- The statistical analysis provides strong support to Hypotheses 2 and 4.
- The intention of our work was to use national culture as prescriptive information to organizations. The consequences for organizations of high levels of masulinity are:
- The consequences for organizations of low levels of uncertainty avoidance are:
- The sample used represent European countries but in the future we haven’t introduced control variables as the size or the sector of the companies. Also we must consider to use more cultural index to complete these research