AylorB_Unit10a1_ResearchPaper_FinalPoject

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COLLABORATING INNOVATION WITH
DEVELOPING REGIONS An Exploration of IPR
Protection Levels and Moderating GDP for
Innovation
THESIS · JUNE 2015
DOI: 10.13140/RG.2.1.2272.3687
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1 AUTHOR:
Bonnie Renee Aylor
Capella University
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AylorB - Collaborating Innovations Tuesday, June 16, 2015 0 of 26
COLLABORATING INNOVATION WITH DEVELOPING REGIONS
An Exploration of IPR Protection Levels and Moderating GDP for Innovation
By: Bonnie Aylor / 2030815
For: BMGT8010 / Spring 2015 / Unit10a1 / Dr. Tony Pizur

AylorB - Collaborating Innovations Monday, June 1, 2015 1 of 26
By: Bonnie Aylor / 2030815
For: BMGT8010 / Spring 2015 / Unit10a1 / Dr. Tony Pizur
Abstract
After researching a market introduction of a Smart Car into the BRICS regions of India
(Aylor, 2015), a team of researchers designed a project to introduce more sustainable energy
systems into the region. There is only one problem – there is a need to design a strategy that will
allow innovations to survive in the low IPR region. This study examines the ability of low IPR
to support innovation within a developing region. Unlike past research this, this study looks to
find out how innovation can be creating in the midst of current situations, and then to find a way
to get around current systems so that the IPR protection problem is overridden. The final
conclusion finds that weak IPR does facilitation innovation in developing countries, but only
imitation designs. The research suggests the need for open systems of innovation, co-creation,
and knowledge sharing coupled with the need for stronger IPR protections with a broader range
of acceptable items approved for patenting. There are some recommendations for future
research.

Table of Contents
Abstract ...........................................................................................................................................................1
Introduction.....................................................................................................................................................3
A Solution...................................................................................................................................................3
Economic Significance...............................................................................................................................4
Generation of Innovation - Macroeconomics..................................................................................................4
Effect on the Firm - Microeconomics .............................................................................................................5
Dealing with Developing Regions...................................................................................................................5
Research Question:..........................................................................................................................................6
What is IPR?....................................................................................................................................................6
IPR within the USA....................................................................................................................................7
IPR within India .........................................................................................................................................8
Comparison.................................................................................................................................................8
Importance of Anticipation.........................................................................................................................9
The Legacy of Informal Protections .........................................................................................................10
What is Innovation? ......................................................................................................................................12
Open vs Closed Innovation.......................................................................................................................12
IPR, Innovation, WTO, TRIPS and 2-Game Theory.....................................................................................14
Innovation and SMEs ....................................................................................................................................16
Contributing Innovation to Development......................................................................................................16
Co-Creating Innovation.................................................................................................................................17
Discussion and Conclusion ...........................................................................................................................18
References:....................................................................................................................................................21

Introduction
During a marketing study being administered to introduce a smart car into one BRICS
country (Aylor, 2015), a team of researchers exercise the task to analyze the most viable BRICS
member, according to a specified list of factors, which can determine a sound market economy
based on the specific product of focus. Since the Smart car originally of choice for the market
entry runs on electricity (Aylor, 2015), the team places a high priority on the suitability of the
energy infrastructure within each country under analysis. During the analysis a determination
finds that India and a non BRICS country - South Korea, have the most sufficient energy
structure (Aylor, 2015). Since the team wants to focus on the BRICS countries, and South Korea
is a largely volatile market in the focal product area, the team decides to choose India. There is
just one problem - India's energy infrastructure is counterproductive to the purpose of the
product.
A Solution
In order to bypass the problem so that the Smart car can be sold there, a plan a plan
designed. First of all, the team decides that it is best to start by introducing the petrol version of
the same car (Aylor, 2015). Secondly, to make the car more competitive, a computerized system
is designed for the car to help the customers detect road hazards, car problems, and service issues
ahead of time, before the issue can become compounded and additional devices are needed
(Aylor, 2015). The implementation of this plan requires networking with local small mechanics
facilities to administer service plans and warranties when issues surface that require the cars to
go under repair (Aylor, 2015). The final leg of the plan includes the expansion of network
connections so that the company can introduce some of the new experimental designs in
sustainable energy (Aylor, 2015). The company wants to begin conducting some of that

necessary research within India so that new designs can be built to meet the independent needs of
India alone.
Economic Significance
There are a few economic principles that can be applied to such a situation. Economists
have to think of the micro scale when considering the benefits to either the initiating firm, or
even to the individual firms that will be involved with the sales of the automobiles inside of
India. They would also need to think on the macro scale in terms of the effect these
technologies would have on development inside of India, and within the general economy of the
globe as an indirect effect of the effort. Firms would also have to consider World Trade
Organizations (WTO) standards related to intellectual property rights (IPR) when doing business
between the two nations (Gerber et al, 2011), and what types of things were required for
regulation under those standards between the two nations. One important thing to consider when
addressing the usefulness of an effort such as this involves the way that IPR, as regulated by the
WTO, effects the ability for a developed nation to trade with a developing nation, and for those
two nations to collaborate emergent technologies.
Generation of Innovation - Macroeconomics
According to Weinhold & Nair-Reichert (2009), innovation emerges from two different
conditions of the market - when there is a need to bring in more products, and when there is a
large demand for products and a need to find ways to supply. These authors also find that the
need for more products tends to effect the creation of IP for local entities, while increased
demand tends to effect the rate of IP generation for external entities (2009). However, according
to Hudson & Minea (2013), the pattern of IP generation is a little more complicated, such that IP
generation, otherwise known as innovation or emergent capital, tends to increase with increasing
IPR intensity, but only in relation to economies exercising a higher GDP. In lower GDP

economies, this effect may be reduced. One explanation that may serve to resolve this can be
defined in terms of theory presented by Nielson & Dane-Nielsen (2010) regarding the
differences between market value of intellectual capital and the value of the firm in relation to
the intellectual capital. When markets become more volatile, and external IPR becomes more
prevalent, the desire to innovate becomes reduced because there is no need to create a larger
market and demands are being sufficed for.
Effect on the Firm - Microeconomics
There are a couple of different mechanism where this effect generates from within the
firm. First of all, according to research conducted by Michie et al (2002), employees that are not
being compensated for their ability to create intellectual property are no longer concerned with
the generation of it, and they will leave the firm. So when markets are volatile, IPR is
unregulated, and companies are not being compensated as they should, employees tend to leave
the firm and there is no longer any social capital available to generate the IP (Michie et al, 2002).
This is further backed by Nielson & Dane-Nielson's (2010) depiction of IP of the internal firm on
three different dimensions - the individual, the team or group, and the entire firm. In this
depiction, the individual employee generates IP of different components of the product, then the
team combines these separate components into one general product with its own IP, and this IP
gets transferred into the IPR of the entire firm (2010). Without the IP generation of the
component parts, it is increasingly more complicated to provide that final product.
Dealing with Developing Regions
Economists are mixed in regards to the ability to use IPR to generate innovation in
developing regions. However, as expressed by Stachowitz-Stanuch (2012), the economic
sufficiency of a nation can be partly derived from a factor related to the number of IPR's held as

internal to the nation. In research conducted by Lanio et al (2011), it was determined that the
level of protection regarding IPR is directly related to the ability to create new environmental
innovations when dealing with environmental regulation - such that the more protections there
are the more comfortable the firm is that the ideas will be protected, even when made public.
While Hudson & Minea (2013) find that GDP moderates IPR and innovation, Lania et al (2011)
find that IPR protection can further moderate the effect of GDP. Stachowitz-Stanuch (2012)
found a tight relationship between IP and perceived corruption, but were not able to discover
what the relationship is. It is possible that lack of protection may create hesitation and that
highly volatile markets may be composed of too much IP from outside sources to be effective on
internal economies while employees move from one employer to another and share IP secrets in
order to gain a greater income.
Research Question:
This research will explore the connection between IPR protections and the ability for
developing nation to create innovations, and the relation of this level of innovations on resulting
economic value of the nation. The question under study will be: What effect do the protections
provided by the WTO towards IPR effect the ability for a developing region to collaborate
innovation with a developed region in efforts to create more development?
What is IPR?
In order to conduct a thorough examination on intellectual property (IP) rights (IPR) and
the ability for them to moderate innovation, researchers must first develop an understanding of
what intellectual property is. When encountered with this question, many people immediately
think of written work - such as journal entries, books, screenplays, and other types of written
articles. However, intellectual property concerns a much wider array of intellectually derived

materials (USPTO, 2015). The Merriam-Webster (2015) online dictionary provides a simple
definition and a full definition. The simple definition is just something that comes from the mind
(2015). The full definition is defined as property that carries a license, or other type of legally
defined rights document, that is derived from the mind (2015). In most instances, the definition
remains the same globally - however, there may be some difference in regards to the types of
IPR under protection in each region.
IPR within the USA
The United States has been known as a country that honors strong IPR. In the United
States, IPR is regulated through the patents and trademarks office (USPTO, 2015). This is the
office that allows for citizens to register for a IPR license - such as a copyright, trademark,
patent, title, or other legally defining document describing what a person has created and the
dynamics of what that person owns and for how long (USPTO, 2015). The United States even
requires such protections as the registering of website domains, and the expiration thereof, even
after the original rights have been admonished due to nonrenewal or lack of use (USPTO, 2015).
Patents, copyrights, and trademarks have timeframes of activation that allow owners a good
amount of time to earn money from their work before the rights dissolve. For instance, music
artists own the rights to their songs for 25 years and then then they can be dissolved and other
artists can easily make their own version without obtaining permission from the original artist
(USPTO, 2015). These right withhold even after the death of the artist. Trademarks dissolve
after 75 years and also withhold after the death of the original IPR rights holder (USPTO, 2015).
However, there are protections for dealing with international constituents and local IPRs
(USPTO, 2015). These include trade sanctions, the disallowance of local sales and other fees
that intercept piracy regimes from doing business within the borders (USPTO, 2015). The United
States is strict on protecting the rights of IP creators within the country's borders.

IPR within India
India also has a specific policy that governs intellectual property rights. Information
about India's patent laws are available through the World Intellectual Property Organization
(WIPO) (2015), as well as on India's patent website (IpIndia, 2015). According to their most
recently amended Patent Policy Act for 2005 (WIPO, 2015), there are a lot of different type of
inventions that are not applicable for a patent. There is also a long provision that excludes most,
if not all, anticipatory rights (WIPO, 2015). The IPR registrations include patents, designs, and
trademarks (Ipindia, 2015). The patenting process is self-explanatory - there is a long form that
requires detailed information and specifications about the invention in multiple places on the
form, with no exceptions for missing information (IpIndia, 2015). There are also a list of
accompanying fees (IpIndia, 2015) - just like the USA. However, these patents can be
disapproved for reasons other than their workability or previous approval. Also, if one of the
inventors dies before the patent is approved, the name can be released from the document
(WIPO, 2015). Furthermore, although the policy does mention a time frame for the length of the
patent or right, it does not stipulate what that timeframe is (WIPO, 2015) - it's as if it just gets
written in once the patent is approved. Basically, the government has full discretion over IPR in
India.
Comparison
Even though both countries do have a set of patent rules, there are some differences
between them. The first major difference has to do with what can and cannot be approved for a
patent (IPIndia, 2015; USPTO, 2015). To start off, the United States has more IPR registration
documents than just patent and trademark, including a copyright license and side mark, and
special protections for certified Native American products and insignia (USPTO, 2015). The
United States is relatively interested in the protection of ideas and intellectual research

(Copyright, 2015) - items that are excluded from India's Patent Policy, listed as ineligible for
patent (IpIndia. 2015). The United States patent law includes a provision that those inventions or
patentable items that were displayed in any sort of medium in front of any type of audience will
maintain ownership to the original entity that displayed it, as long as the patent is applied for
within in one year (USPTO, 2015). In India, this is not allowed (WIPO, 2015). India has a tight
provision of secrecy for their patents where they are not to be published until the patent is out of
date (WIPO, 2015), whereas the America's are strict about publishing in that patents have to be
published during the application process and they have to be published while under the terms of
the patents (USPTO, 2015) so that others can know what is already protected and what it not.
India's laws also exclude discoveries of scientific processes in nature and other inventions
that have no objective reason for exclusion (WIPO, 2015). In the United States, an invention can
be granted on the objective quality that it is workable at the time of application and approval
(USPTO, 2015). India offers no protection for the arts and aesthetics (IPIndia, 2015), whereas a
major form of IPR protection in the US involves arts and aesthetics (USPTO, 2015). Games are
excluded from protection in India (WIPO, 2015), but are highly protected in the US under
trademarks, copyrights, and even patents if the games are workable (IPIndia, 2015). In
summary, the US offers patents for just about anything - if the thing is workable for what it is
supposed to be at the time that the patent is applied for, and there are no other patents with the
same thing regardless of the novelties of it, then the patent will be granted (USPTO, 2015) -
which is largely separate from India's patent system where there are not many things that are
acceptable for patents.
Importance of Anticipation
There are some important factors related to the ability to use display as a cause of gaining
ownership over a patent before the application is begun. For instance, in May, 2015, Mercedes

(Ceramics, 2015) came out with a brand new concept car - G-code. It features paint that
produces solar electricity, a new powerful motor concept, individually heated and cooled seats
with massagers, and many other luxuries that one of these cars are able to inhabit within them
(Ceramics, 2015). Since the US patent laws require that the thing under application for a patent
has to already be working (USPTO, 2015), companies will often begin to display their designs
publicly - as a concept, before attempting to apply for the patent. This is so that when the
company engineers are nearing the finalization of the design, the designs don't get stolen due to
another business operating at a perato efficient competitive advantage (Gerber et al, 2011) - a
faster manufacturing time. Since the company can display the concept and know that they are
going to be safe for at least a year from that point (USPTO, 2015), they are much less reluctant
to continue progression of the new design concept. Another provision of the US patent policy
that ties in with this situation is that the patent of the concept does not have to be exactly the
same, as long as it is apparent that the machine under patent came from that concept (USPTO,
2015). It's like saying - Hey bud, you wanna try the size of this design?
The Legacy of Informal Protections
Aside from the protection of IPR through instruments such as patents, licenses, and
trademarks, organizations can use informal protections such as lead time, first mover, and lock-
ins. Argowal & Gort (2001) describe the way in which lead times and first mover advantages
can lead the market, creating a pocket where the innovation is unique in its quality and design,
such that it is hard for other market contenders to match. One aspect of this technique is in the
use of production methods that charge a lot of expenses upon market entry (Argowal & Gort,
2001). When this technique couples with a high consumer demand for the product, the new
design gets locked-in (Liebowitz & Margolis, 1995). What makes the product stay in such high
demand even after contenders are able to create duplicates is partly in regard to the trust that

consumers have in the use of the product (Liebowitz & Margolis, 1995). There is also a factor of
stress involving trust for the first mover, including a high regard for first mover intelligence
(Shapiro & Varian, 1999). Another factor is in regards to new movement of the original product
by the first mover manufacturer such that consumers are enjoying what is new and are not
interested in the duplicates that are made with old designs (Argowal & Gort, 2001; Hasdink,
2007; Liebowitz & Margolis, 1995). This change element is what makes lead time so important
- being able to change the new design before the other market contenders are able to catch up
puts the first mover at a position as to claim the expert title, while the other market players are
just following along (Agowal & Gort, 2001). While these competitive protection types are
highly effective, many economists contend that formal protections, such as patents, licenses, and
trademarks, are considerably stronger, especially when dealing with the global marketplace.
Many economists believe that formal protections of IPR can go hand in hand with
informal methods to increase efforts towards innovation. Liebowitz & Margolis (1995) show
how lock-ins tend to hold up the market for innovation since other market players don't see a
reason to create new designs that are outcompeted prior to themselves entering the market.
Argowal & Margolis (2001) explain that patents mitigate the market so that lead times become
decreased due to a lack of fear by other market contenders to present their new designs, and an
absence of the need to create market barriers related to entry expenditures by first movers. This
scarcity of need for higher entry costs related to patents allows lower budget entrants to relegate
the market first more often (Argowal & Margolis, 2001). This is because the patents mean that
the design won't be stolen, so any future designs have to be different than the first market mover
(Gerber et al, 2011), and a lack of barriers won't get the design stolen. In essence, while the
techniques used for informal protections are strong, formal IPR protections are stronger when

using protections to generate innovation. Put another way - in order for other market contenders
to make it on the market, they have to innovate to prove they are still experts.
What is Innovation?
In order to define the way that IPR effects innovation, or even the importance of
innovation, it is first imperative to define what innovation is. According to Atuahene-Gime
(2012), innovation is a new way to solve a problem. Professor John Linton PhD (2007) shows
how innovation can take many different forms. He mentions revolutionary innovations,
evolutionary innovations, product and process innovations, and continuous vs discontinuous
innovation (Linton, 2007). Any single innovation can take on any single form of these
innovation types, or it can be a combination of different types that explains its purpose for being
generated (Linton, 2007). According to Costello & Prohaska (2013), innovation is simply doing
something different - but it has to be productive, something that does good for the company.
Google (2015) defines innovation as a new method or idea. The Business Dictionary (2015) also
defines innovation as something different that provides a valuable return to the company.
Gulshan (2011) includes business methods and processes as a significant part of innovation. In
essence, innovation is change that is profitable.
Open vs Closed Innovation
Innovation has many different constructs or genres and types. One major difference
between the USA and India regarding innovation, as indicated via IPR licensing requirements
(IPIndia, 2015; USPTO, 2015), is that of the open system vs the closed system of innovation.
Gulshan (2010) describes an open system more like exchanges between the internal organization
and the external market, such that innovative system might begin with materials or innovations
designed in the external environment and then used as a platform in the internal organization, or
improved upon by the internal organization - whereas a closed system involves that which is

discovered and generated internally. Wang et al (2010) explain open innovation as the inflow
and outflow of information that includes technologies, acquisitions, and knowledge flows - that
fosters innovation. Wang et al (2010) provide a list of factors effecting innovation and name IP
protections as one of those factors - such that a greater level of protection could affect open
innovation systems positively depending on the IP holder's view of such systems since
proprietary knowledge is protected despite multi-directional flows. Chesbrough & Appleyard
(2007) define open innovation such that it involves the polling of knowledge resources so that a
single emerging technologies cannot be entirely claimed as the exclusive right of one entity, but
more like a public good - even though it is patentable. Unlike other authors, Chesbrough &
Appleyard (2007) limit their concept of open innovation to social media networks to explore the
way in which open innovation provides a world of free knowledge sharing that can be used in the
internal organization to help generate innovations. These researchers take an IP approach to
their look to open systems, whereas others are taking a more process approach.
Many researchers notice that open innovation effects the general process of innovation
inside of firms. Huizingh (2010) provides a responsibility definition to his concept of open
innovation where firms receive inputs towards innovation and, in return, supply the market with
outputs so that innovation can flourish externally. Haironi et al (2009) also agree with this
definition. Finally, Vrande et al (2009) define open innovation as a process in which knowledge
is disseminated outside the firm to leverage external technological advances, and acquired
internally of the firm in order to enhance the firm's own technological advances. The consensus
is that innovation is no longer a confined process of research and discovery that eventually
divulges a new product or process, but it is now an interaction where firms improve upon each
other's advancements to create even greater advances than were previously conceived.

This system of open innovation has some operatives that define how it works. For
instance Gulshan (2010) mentions software platforms that make it so that businesses can search
for data between networks and retrieve from and contribute to computerized knowledge systems.
Huizingh (2010) mentions one method of open innovation facilitation involves open networks
where gain access to open platform systems for sharing information between each other.
Likewise, Chesbrough & Appleyard (2007) stress the use of social media forums where
information is shared and disseminated for free, allowing for a large reduction in expenses.
Vrande et al (2009) mention a need for a system to more easily capture, control and monitor data
retrieved from the social media resources. One thing that each one of them agree to is that open
innovation conduces more internal innovation through the use of public and semi-public display
- and that strong IP protections can serve as an enabler of it. However, one researcher,
Huizinghh (2010), mentions the alternative value creation methods: lead times, first mover
advantages, and lock-ins.
IPR, Innovation, WTO, TRIPS and 2-Game Theory
In order to determine the beneficial effects of innovation and IPR's on development, one
must consider all relevant facts that can assert influence on the distribution of that wealth. One
major influence on that distribution of wealth has to do with the World Trade Organization and
related treaties, such as TRIPS. The TRIPS agenda would allow nations to continue to exercise
the first seller's rights throughout international regions, carrying the same individual IPR licenses
for each region, but would require an exhaustion (Chiapetta, 2000). The consequences of the
TRIPS is that countries holding the original license are able to maintain a better return on
international sales of IP when the rights are not exhausted (Chiapetta, 2000). Most developing
regions prefer for the rights to exhaust so that they can benefit from the reduced value generation

of the products (Chiapetta, 2000). Most developed regions do not want the IPR protections to
exhaust because they want to get compensated for their own IP as the first mover, and they do
not want to have to contend with the development of generic products that are made from the
exhausted protections of a protocol product (Chiapetta, 2000). This would make it hard for a
developed nation to want to do business with a developing region past the length of the original
protections.
The WTO also encourages free trade among international regions. Although this is true,
most regions do not completely comply with the free trade agenda (Gerber et al, 2011). The
Unites States is able to use facets of free trade regulation in order to regulate the protection of
their IPR in international regions. For instance, a recent article about the US trading with India
specified how the United States is able to control its trade policies in order to provide
consequence with IPR's are not protected on external regions (Fintech, 2012). In fact, the US
imposed extra fees on visa's and placed a ban on outsourcing (Fintech, 2012). Although the US
and India may be under a Free Trade Agreement (Jagadeesh & Sasidharan, 2014). The US can
still take prerogatives to ensure that the IPR that are sent overseas are still being compensated.
In a recent article regarding IPR and TRIPS in India, officials admitted that the stronger
IPR protections appeared to generate more innovation in pharmaceuticals than with the weaker
protections (Jadadeesh & Sasidharan, 2014). India signed the TRIPS agreement in 1994
(Jagadeesh & Sasidharan, 2014). Even so, the TRIPS treaty still has not gone into effect, stating
in it's documents mainly that it failed to gain approval (Chiapetta, 2014). In an article by Inside
Washington (2013), it has been discovered that India is starting to look past the TRIPS to
consider other elements related to compulsory license. Officials in India have also voiced
concerns about the SME industry within India and the increasing levels of innovation coming

from that sector (Jagadeesh & Sasidharan, 2014) - with these businesses showing more R&D
productivity when they are able to obtain patents for it. This indicates that India may be more
willing to eventually strengthen their IPR protections.
Innovation and SMEs
Small and medium enterprises (SMEs) are important parts of the developing economy,
especially in regions where corruption abounds. According to Radas & Brozic (2009), SMEs are
integral to innovation within these companies because they need to contribute the innovation to
survive. However, there are specific factors that allow these small income firms to survive and
contribute (Radas & Brozic, 2009). According to Sikka (1999), SMEs need to be able to obtain
knowledge and resources with their limited amount of money, and many time they engage in
alliances in order to do it. Vrande et al (2009) find that when SMEs undergo acts of open
innovation, they are more able to obtain knowledge from external environments and at a much
lower rate, in exchange for giving knowledge into the external environment. Radas & Brozic
(2009) find that one of the major determining factors of SME success is their ability to
collaborate on technologies and knowledge. This is not far from Sikka's (1999) finding that
policy fostering the success of SME's would entail the use of government provision of
technologies and facilitation of R&D. All of these findings point to the important of open
systems of innovation for SMEs and, indirectly, a need for stronger IPR protections that will
foster the ability to engage is open systems of innovation.
Contributing Innovation to Development
In order to generate for innovation in order to increase sales, revenue flows, and
ultimately economic thresholds in developing regions, one needs to discover the best way to
encounter IPR protections that can allow innovation to contribute to such development. The

debate has mainly been regarding whether strong IPR protections contribute to or take away for
the ability to develop in low GDP regions (Hudson & Minea, 2013). According to Chen &
Puttitanun (2004), it isn't necessarily a measure of the GDP, or the level of developing versus
developed - it's rather a measure of the ability to derive the knowledge for innovations that
evolve outside of imitation. Developing regions will need lower IPR protections as they attempt
to imitate another country's technologies in order to put it on the market for themselves, as their
knowledge build through this practice of imitation then the strength of IPR protection should
increase so that they are able to create brand new innovations that are either incremental or
radical (Chen & Puttitanun, 2004). Hudson & Minea (2013) break down this sort of change in
an economic framework and find that there are certain levels of IPR that should be attached to
certain levels of GDP, that are incremental rather than either or. In Radas & Bozic (2009)
analysis of the SME industry in developing regions, they also found that the reason for the lack
of innovation lied within the realm of the lack of knowledge regarding innovation. Sikka (1998),
in his analysis of technological innovations in SMEs within the borders of India, found that a
major contributing factors was lack of knowledge and lack of resources - he recommends
collaboration, government facilitation of resources, and a gradual strengthening of IPR to
provide a more inviting atmosphere for collabroation.
Co-Creating Innovation
One solution that as offered Radas & Bozic (2009) was in the clustering of firms into
industry zones in order to share resources. Sikka (1998) also mentions that many firms have
tended to form alliances with other technologically astute MNCs in order to have the required
technologies provided at a much better rate. Wang et al (2012) also show how networked
systems of knowledge sharing have become a major part of the open innovations infrastructure.

However, the open innovation system requires a tighter IPR protection system top operate in
such a way that more knowledgeable entities are willing to share their knowledge across them
(Huizingh, 2010). According to Vanchezwaren and Guatam (2011), SME's in India are starting
to generate greater levels of innovation by participating in Western style management practices
by joining globally competitive markets in sustainability - where they are gaining and sharing
knowledge from their global peers.
In order to provide an atmosphere where innovations in these developing regions get to
the level that they are increasingly positively effecting the gross domestic level, it is important to
continue to invite SME's (Radas & Brozic, 2009) to form open system of innovation through the
facilitation of computerized knowledge systems, social media access, and networks or
knowledge and technology sharing (Huizingh, 2010). These systems can provide the
groundwork that SME's need through knowledge building and a minimal cost to them (Chen &
Puttanun, 2004) and catalyze the ability to move beyond imitative practices and move straight
into the incremental and radical levels of innovations (Sikka, 1998), where they are developing
new products. The inclusion of co-collaborative methods of innovations - where the open
system becomes a partnership where organizations are generating innovations together and then
presenting them to the rest of the network as new innovations and for knowledge transfer
(Huizingh, 2010) will assist in the transition into this purely open market of innovation. In order
to facilitate this, it is imperative that IPR protections be strengthened (Vandre et al, 2009), and
then IPR approvals open up to a much wider array of IP items.
Discussion and Conclusion
Charged by recent research regarding the introduction of a Smart Car into the
predominantly coal powered region of India (Aylor, 2015), and the desire to be able to include

the Smart Car by assisting in the development and reformation of the energy structure through
intra-organization alternative energy R&D inside of the introductory corporation - it became
imperative to study the ability to generate innovation inside of a developing region with certain
levels of IPR so that the R&D systems could sustain (Gerber et al, 2011). In order to do that, it
was important to also understand the way that IPR protections effect innovation, and the way that
innovation works inside of a developing region (Hudson & Minea, 2013). This study analyzed
the general effect of IPR protections on innovation, the difference between open innovation and
closed innovation, what innovation was, how development effects SME's ability to innovate, and
what the differences are between IPR in the USA and India. Findings realized that the building
of open system innovation networks among SMEs inside of India combined with the co-creation
of innovation with MNCs could foster the optimal kind of development for a project that would
invite new energy systems inside of India and sustain the continued growth of such systems.
However, to encourage the development of this networked, innovative environment, India could
benefit from the increase of IPR protections with an expansion of the stipulation regarding which
IP items are eligible to receive formal IPR protections.
These results could benefit from some future research. First of all, research could be
conducted to find the correlation between open systems of innovation and co-creation of
innovation in order to better define the individual facets of each one. The results of this study
could be combined with a study of knowledge sharing alliances and the ability for knowledge
sharing within these three systems to catalyze the emergence of radical and incremental
innovation of the individual firm. Once the ability to catalyze such innovative creations has been
determined, an empirical cross examination of the three systems could be conducted in order to
determine which system is stronger for creating more advanced levels of innovation.

Furthermore, a study regarding the longevity of the ability of these systems to produce radical
and incremental innovations – including whether they tend to be specialized or transformative.
Also, a study should be conducted discovering of the provision of knowledge and co-creative
processes as capable of overriding the need for weak IPR protections in a developing economy
towards to creation of a larger number of advanced innovations. Finally, a study in the ability of
anticipatory rights in patent approval increases innovative practices and whether there is a
difference between the ability for it to increase innovation between developed and developing
regions.

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