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Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
1
Multinational technology and intellectual property management
- Is there global convergence and/or specialization?
Ove Granstranda) b) and Marcus Holgersson* a) c)
Published in International Journal of Technology Management, please use the following reference:
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
* Corresponding author
a) Industrial Management and Economics Research Group
Department of Technology Management and Economics
Chalmers University of Technology
SE-412 96 Gothenburg, Sweden
b) E-mail: ovegra@chalmers.se
Phone: +46-31-772 1209
c) E-mail: marhol@chalmers.se
Phone: +46-31-772 5288
Abstract
The paper gives various indications of market and technology diversification as well as of
global market and technology convergence (rather than specialization) in the context of
managerial, legal and economic convergence. The results show that different countries focus
on a wider but increasingly similar set of markets for R&D outputs in form of patents, which
implies increasing intra-national market diversification and inter-national market convergence.
The results also show that different countries focus on a wider but increasingly similar set of
technologies that are patented, which implies increasing intra-national technology
diversification and inter-national technology convergence. In addition, intellectual property (IP)
legal convergence takes place as newly industrialized countries (NICs) have strengthened their
IP regimes in compliance with TRIPS and subsequently do so in the context of their indigenous
innovation policies. Asian NICs have significantly increased their international patenting and
supply of patented inventions. Altogether, this puts new demands across countries on
multinational technology and innovation management skills, and in particular multinational IP
management skills.
Keywords: Technology convergence; market convergence; revealed technological advantage;
revealed market advantage; technological specialization; market specialization; diversification;
patent statistics; technology management; intellectual property management; intellectual
property regime; internationalization; catch-up
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
2
1 Background and purpose
Looking at the countries in the world it is clear that most of them do not influence globalization
very much. At the same time globalization substantially influences almost all countries, e.g.
regarding their consumption, trade, and investment decisions, including innovation and
technology management decisions. In the context of globalization as a phenomenon at
aggregate level, it is then natural to ask whether there are any indications of international
convergence and/or specialization in some sense. On the one hand globalization might lead to
large-scale conformity, standardization and homogenization, or in biological systems terms to
competitive exclusion and loss of diversity. On the other hand technological opportunities and
possible diversity increases over time. In addition, the rates of adoption and diffusion of new
technologies and innovations may be country-specific so that essential differences across
countries will persist.
The general purpose of this paper is to explore developments along a number of dimensions of
convergence and their interrelations in a global context, and the ensuing implications of any
signs of convergence for technology management. This purpose will be pursued by
characterizing convergence in economic, legal, management, market, and technology terms.
Quantitative empirical results have been collected for various indicators of market convergence
and technology convergence through patent statistics, and qualitative information related to
especially legal convergence of intellectual property (IP) legal systems has been collected
through field studies in Asia, Europe, and US.
1
The paper is structured along the various types of convergence with sections for frame of
reference with key concepts and literature (where specific research questions are derived),
methodology, empirical data analysis, discussion and managerial implications, and finally
conclusions.
2 Frame of reference and literature
2.1 Key concepts
The concept of convergence in general refers to the increasing similarities (or equivalently
decreasing differences or dissimilarities) across two or more entities over time. Here we will
distinguish between the following dimensions or types of convergence across national entities
(countries):
1. Economic convergence, i.e. decreasing economic differences between different
countries, e.g. differences in gross domestic product (GDP) per capita, differences in
rates of economic growth, differences in international trade patterns, and differences in
1
The paper will not deal with military R&D and technology, however, which is obviously an important factor in
geopolitical developments including economic developments. Although military technologies are increasingly
being patented and licensed internationally, patent statistics offer limited possibilities for drawing conclusions
regarding internationalization of military R&D and technology.
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
3
quality and longevity of life. Economic convergence is an overarching type of
convergence for contextualizing other types of convergence.
2. Legal convergence, i.e. decreasing differences between legal systems in different
countries, e.g. the intellectual property rights (IPR) systems.
3. Management convergence, i.e. decreasing differences between different countries in
terms of national management styles, strategies, skills, and methods. This focus then
includes strategic management decisions in companies with different nationalities and
whether these decisions become increasingly similar. Decisions regarding which
technologies to develop and patent, and where in the world to patent them then
constitute two types of decisions that we will focus especially on, as further described
below.
4. Market convergence, i.e. companies with different nationalities increasingly
prioritizing similar sets of national markets in their international patenting.
5. Technology convergence, i.e. companies with different nationalities increasingly
investing in, developing, and patenting similar sets of prioritized technologies.
2
New quantitative empirical data analysis is presented for market and technology convergence,
while qualitative information on the other dimensions of convergence is used to frame and
contextualize the quantitative results. Market and technology convergence are both closely
related to management convergence, and can actually be regarded as subsets or sub-dimensions
of the latter since they are related to convergence of management decisions (see below).
Management convergence is moreover closely related to the institutional economic and legal
environment that firms operate in, since differences in local institutional environments might
result in local and differentiated management strategies and decision patterns. The IP legal
system in a country is finally guiding decisions of organizations and individuals in a way that
supposedly leads to increased welfare and economic growth for the country, since most IP legal
systems are by and large formed on a utilitarian rather than on a moral rights basis.
A concept closely related to convergence is specialization. Here we distinguish between two
main types of specialization related to market and technology convergence, respectively. First,
a country (or company or other entity) can be or become more narrowly focused on few(er)
markets or technologies. This is thus a country-specific state or process of specialization,
independent of the specialization of other countries. We therefore call this type of specialization
intra-national specialization, with its opposite (i.e. a focus on a wider range of markets or
technologies) being intra-national diversification. Second, a given country can be more
focused (in some sense) on a specific market or technology, relative to other countries on
average. This is then a state of that country’s inter-national specialization in that specific market
or technology. One can then study the process of increasing or decreasing inter-national
2
This concept has to be distinguished from the concept of technological convergence, as pioneered by Rosenberg
(1963), and the related concepts of technological confluence by Jantsch (1967) and technology fusion by Kodama
(1992), meaning that two or more technologies increasingly become combined or jointly developed in various new
products.
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
4
specialization (or inter-national divergence), either in a separate market or separate technology
or on a more aggregate level of separate sets of markets or technologies. The opposite to inter-
national specialization is inter-national convergence, i.e. when countries become increasingly
similar in their focus on various markets or technologies relative to other markets or
technologies.
3
This will be further described in the methodology section.
4
2.2 Previous literature and research
2.2.1 Economic convergence
Economic convergence is addressed here as an overarching dimension of convergence, closely
related to all the other dimensions of convergence. As industrialization and technological
developments were set in motion historically at different paces and places, interrelated
economic and technological gaps increased across countries, resulting in increased divergence.
As globalization proceeds one could expect a subsequent transition to convergence to the extent
that countries and companies are able to catch-up technologically and economically, which in
turn is influenced by managerial and political skills, endowments, institutional structures and
other factors. Economic convergence does not necessarily imply other dimensions of
convergence, however, since similar economic results may in principle be produced by
dissimilar means. In fact, division of labor, investments in R&D and education, free
international trade and dynamic comparative advantages, e.g. through learning and
technological specialization, have long been advocated as conducive for economic catch-up,
see e.g. Abramovitz (1986), Cantwell (1999), Freeman et al. (1982), Patel and Pavitt (1994)
Santangelo (2005), Scherer (1999) and Schumpeter (1942). At the same time it is not clear that
economic and/or technological catch-up is at all possible under certain conditions. As in most
development processes initial conditions, early mover advantages, and history (path-
dependence) matter. Technological leaders may be able to maintain their leads through
sustaining superior R&D investments, “evergreening” through IP protection, and limiting
technological spill-overs.
5
Such a strategy may be successful for large advanced countries vis-
à-vis small ones but less so, if at all, vis-à-vis large ones such as China and India because of the
attractiveness of their large domestic markets to foreign entrants from advanced countries. At
the same time many countries have been able to technologically catch-up and there are few, if
any, cases in history of sustained exclusivity of technological leadership, just as there are few
3
All combinations of intra-national specialization/diversification and inter-national specialization/convergence
processes are possible. Imagine e.g. that we study the use of dining tools in China and Europe. Let us now assume
that one half of the Chinese people eats with forks while the other half eats with chopsticks, and that all Europeans
eat with forks. If now the Chinese people eating with chopsticks would start switching over to forks we would get
a process of intra-national specialization (due to an increased focus on forks only in China) and inter-national
convergence (due to increasing similarities between China and Europe), while a reversed process would lead to
intra-national diversification and inter-national specialization. A process where the Chinese people eating with
forks would start switching over to chopsticks would lead to both intra-national specialization (due to an increased
focus on chopsticks only in China) and inter-national specialization (due to increasing differences between China
and Europe), while the reversed process would lead to intra-national diversification and inter-national
convergence.
4
Note that these conceptualizations do not only apply to markets and technologies, but also to products, resources,
etc. Neither do these conceptualizations apply only to nations, but also to companies and other entities.
5
As to the concept of evergreening, see Granstrand (2003, Ch. 10).
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
5
if any cases of a country catching up technologically in the presence of a strong IP regime from
the outset. Patent statistics provide early or precursory indicators in this context.
As to some empirical results about economic convergence across countries Baumol (1986)
found clear signs of converging income per capita measures for 16 industrialized countries in
the period 1870-1979. These signs of convergence are substantially weakened by sample
selection bias and measurement errors, as shown by De Long (1988). Moreover, Summers and
Heston (1991) found little evidence of economic convergence in a study of most of the non-
communist world in the period 1960-1985. Thus, poor countries do not so far seem to have
grown faster than rich ones on average over long periods of time. Despite a growing set of
economic growth studies and studies in comparative economics it is therefore still an open
question if there is economic convergence and if globalization will lead to more comprehensive
rather than partial economic global convergence. It is also an open question how the economic
and legal institutional environment constituting national innovation systems of various types
impact innovativeness and economic performance and if the national innovation systems with
all their differences after all converge.
6
2.2.2 Legal convergence
It is a long standing issue in comparative law whether different legal systems will converge and
if so to what, especially since there are no strong inherent universal concepts of justice and right
according to legal anthropologists. More specifically in a Western context any convergence of
the continental European civil law and the Anglo-Saxon common law legal systems is of
interest and there are signs that some convergence is taking place, albeit far from any true
harmonization. Still, an open question is which type of legal system is most conducive to
innovation and economic growth and development. It might be argued that a common law
system (being relatively more based on legal cases) is more flexible and reactive to new
technologies and industrial developments than a civil law system (being relatively more based
on certain theoretic principles), but adaptability in itself does not necessarily imply
innovativeness. As to the patent system in the world, which is of special interest in this paper,
international diffusion and harmonization of the various national patent systems has progressed
steadily throughout centuries, although there is still a long way to go in international
harmonization, see Granstrand (1999b, 2003). As to harmonization, which concerns not only
codified laws but also law enforcement, law adherence and court practices (e.g. regarding IP
damage calculations), between developed and developing countries, a long-standing concern is
the differences in strength in some sense of patent and IP systems across different countries, or
the appropriability regimes more generally. The variations in national IP legal systems clearly
impact both technological choices and marketing decisions. In certain countries, some
technologies are not patentable, and in certain countries it is not worthwhile to patent in general,
due to e.g. weak enforcement or low patent infringement damages and rare injunctions.
Moreover, differences in IP legal systems around the world increase multinational technology
management costs and uncertainties. On the other hand, different IP legal systems also have
6
For descriptions of various national innovation systems, see e.g. Edqvist (1997), Lundvall (1992), and Nelson
(1993).
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
6
different impacts on economic growth and development for countries in different development
stages (see e.g. Kim, 2011, and Park and Ginarte, 1997, for related studies).
2.2.3 Management convergence
Comparative management studies in general are growing and many national differences have
been identified and analyzed, see e.g. Edfelt (2009). Whether these national differences
decrease on average over time, i.e. that there is management convergence, is by and large an
open question as well. Still, there is some evidence (often anecdotal) that suggests that such
convergence takes place after all. The expansion of multinational corporations (MNCs), the role
of multinational management consultancy firms (mostly US) and managerial service firms (like
accounting and financial service firms), the internationalization of financial markets,
harmonization of international accounting standards, the international mobility of managers,
international competition on input/output markets and so on are all factors that tend to lead to
increasing management convergence in the longer run.
As to technology management more specifically, comparative management studies are few.
Studies of chief technology officers (CTOs) identify certain similar features among them (see
Adler and Ferdows, 1990, and Herstatt et al., 2007). Some evidence from studies of technology
management practices in US, European and Japanese MNCs also suggest a certain convergence
of technology management practices as these MNCs increasingly internationalize and compete
on international markets, not only output markets but also input markets, e.g. markets for talent.
An example of such convergence practices is the increasing use of external technology
acquisition strategies and open innovation. At the same time there are many distinctive national
features and practices, e.g. the degree of centralization of R&D (see Granstrand, 2000b).
Regarding use of open innovation or external technology acquisition strategies, these depend
on the developmental stage of a company and a country. Needless to say a company or a country
trying to catch-up is more dependent upon external technology than a technological leader,
everything else equal (see e.g. Abramovitz, 1986, and Mansfield, 1988).
7
A country will then
benefit from a resource base congruent with technological opportunities (Abramovitz, 1990)
and an R&D production structure apt to absorb technological spill-overs (Abramovitz, 1991,
Beelen and Verspagen, 1994).
Further case study evidence indicates a certain convergence in multinational R&D and
multinational technology management as to location (e.g. in Bangalore and/or Silicon Valley)
and role of foreign R&D labs in MNCs. Early industrialized countries like Holland and Sweden
with small domestic markets became early internationalizers of their sales, production and R&D
(Granstrand et al., 1992b). Companies like Philips and SKF already in the 1970s had a
substantial amount of R&D located abroad.
8
They reorganized their worldwide R&D and
7
If technological diversity or complexity is also taken into account, technological leaders are also dependent upon
open innovation and more so the more diverse and expensive the technology base of the leader is.
8
SKF was probably one of the world’s most globalized companies in the 1970s, not the least regarding R&D and
production. A ‘global forecasting and supply system’ was introduced with global coordination of local for global
R&D and production in response to Japanese competition. A multinationally manned central R&D lab with foreign
location was created as a hub for world-wide R&D. (See Granstrand, 1982, and Granstrand and Fernlund, 1978.)
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
7
product development from local-for-local to local-for-global development and distinguished
between demand and supply led R&D labs. These management practices then became
increasingly adopted by companies in large countries like US and Japan.
Studies of the international adoption and diffusion of managerial inventions also suggest that
management convergence takes place. As to new managerial inventions (techniques, methods,
models, etc.) one can see how old ones like the multidivisional form (M-form) of corporate
organizations, technological forecasting techniques, capital budgeting techniques, and later on
venture capital organizations diffused around the world among advanced MNCs. Especially
Japan then developed a number of additional ones in production and technology management,
like Kanban, total quality management (TQM), just-in-time (JIT), Kaizen, and patent mapping
in intellectual property management (IPM) (see e.g. Granstrand, 1999b). In this context a study
by Lillrank (1995) indicates that organizational innovations are typically more difficult to
transfer across cultural, national, and industrial borders than are innovative management
principles and tools, suggesting different rates of convergence.
9
In this process of cross-national learning and knowledge transfer, management principles and
strategies could possibly converge to some international best practices, especially if
globalization leads to decreasing importance of local (national) factors, which would otherwise
require differentiated management strategies. This leads us to study two types of management
strategies, and the corresponding dimensions of convergence: Market convergence (related to
the relative importance of various output markets) and technology convergence (related to the
relative importance of various technological areas).
2.2.4 Market convergence
The concept of market convergence can relate to different aspects of markets, including market
integration (see e.g. Goldberg and Verboven, 2005), price convergence (see e.g. Rogers, 2007),
and product market convergence.
In this paper we define market convergence more specifically as the convergence of
geographical output markets’ relative importance for different countries of origin of products.
It can thus be seen as a special form of management convergence, related to the output market
decisions of managers. We especially focus on new product markets, and use patent statistics
on aggregate national level as a proxy of this. Thus, this convergence is related to the
management strategy decision “where to patent”. With a patent in a specific country, the patent
holder can exclude others from commercializing (through both manufacturing and selling) the
patented invention in that country. Therefore, one can assume that patentable inventions are
patented in the countries/markets where the inventor/inventing firm has or will have some form
of technology-based business (including both product and technology sales) during the
In 2011 SKF was still an essentially Swedish European company but with a non-Swedish CEO as well as a non-
Swedish CTO.
9
Based on cases like these Vernon’s international product life-cycle (PLC) theory could be seen to apply also to
management developments. The model may continue to apply in this area (despite all criticisms voiced over it in
general, see Cantwell, 1995). If so, Western companies could expect to learn in the future from Chinese and Indian
management, not least in the area of technology management (e.g. in large scale R&D and production, software
development, and bio-tech).
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
8
estimated length of the effective patent protection and where the inventor/inventing firm finds
it likely that the benefits from patent protection are greater than the patent costs (applications
costs, renewal fees, and costs of the information disclosure related to the patent application),
taking into account the risk of being subjected to competing imitations and the protection
provided by the IP legal system and its strength of patent legislation and enforcement in the
country in question (see e.g. Granstrand, 1999b). Now, the related research question that will
be probed empirically in this paper is: Do the sets of country markets selected by inventive
firms/individuals for patenting become increasingly similar, i.e. is there a market convergence
globally? This question has to our knowledge not previously been studied.
10
2.2.5 Technology convergence
The number of worldwide patent applications has steadily grown during recent decades.
According to World Intellectual Property Organization (WIPO) estimates the number of
applications has increased from 926 000 in 1985 to 1 908 000 in 2008, corresponding to a
compounded annual growth rate (CAGR) equal to 3.2%. Moreover, the number of priority
filings, which excludes double counting of patent applications for the same invention to many
different patent offices, has increased from 579 000 in 1990 to 881 000 in 2007, corresponding
to a CAGR equal to 2.5% (using the WIPO statistics on patent families as a measure).
Looking more deeply into the technological areas in which various countries file patents,
different countries’ technological specializations have been investigated in a range of studies,
including the ones by Archibugi and Pianta (1994), Cantwell (1989, 1991), Cantwell and
Vertova (2004), Dosi et al. (1990), Gambardella and Torrisi (1998), Pavitt (1982) and Soete
(1981). The results of these studies have in general showed that inter-national technological
specializations increase, and that the areas of specialization are cumulative, in turn giving rise
to path dependencies. These increasing national technological specializations can be interpreted
as technology divergence between countries, since high levels of specialization in various
countries relative to other countries imply differences between them in terms of areas of
specialty.
As to technological diversification, Archibugi and Pianta (1992) found a positive relationship
between size of national technology bases and technological diversification and Cantwell and
Vertova (2004) investigated this relationship further and concluded that countries have become
less diversified (or more narrowly specialized) over the past 40 years. One explanation
addressed in that paper is that international technology sourcing activities lead to different
geographic locations focusing on what they do best. This goes in line with the model by
Krugman (1987) in which specialization is predicted to be stable due to economies of scale and
lock-in effects.
10
Some work has been published on related issues, see e.g. Bosworth’s (1984) and Caviggioli’s (2011) works on
determinants of foreign patent applications to certain countries (from other countries) and foreign patent
applications from certain countries (to other countries). These studies have however not had a global focus, but a
focus on single countries or subsets of countries. Neither have they focused on convergence across different
countries.
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
9
Besides showing increasing levels of inter-national technological specialization (i.e. technology
divergence), Archibugi and Pianta (1994) showed convergences between OECD countries in a
number of other economic and science and technology indicators, including GDP per capita,
R&D intensity and external patents per unit of exports. They conclude that countries converge
in these other indicators by becoming more technologically specialized and different in that
aspect.
In contrast with the aforementioned studies on technological specialization, a study by Dalum
et al. (1998) on trade specialization, which in that paper is assumed to be closely linked to
technological specialization, shows that the development between 1965 and 1992 can be
characterized by de-specialization (technology convergence). High revealed symmetric
comparative advantages (RSCA) are shown to decrease while low ones are shown to increase
over time.
Now, the related research question that will be probed empirically in this paper is: Do the sets
of technological areas developed and patented by inventive firms/individuals become
increasingly similar, i.e. is there a technology convergence globally?
3 Methodology
As described above, five different dimensions of convergence and their interrelations are
elaborated in this paper, although the empirical evidence is focused on market and technology
convergence, and to some extent legal convergence. The units of observation and analysis in
general are the world’s countries as recognized by agencies like WIPO and the United States
Patent and Trademark Office (USPTO), and companies and inventions of various nationalities.
The population frame of countries varies a little over decades (and of course quite a bit over
centuries) but roughly consists of 170 countries in this study.
Quantitative data in form of patent statistics is used for market and technology convergence and
specialization. A patent right is granted in a country for a specific invention and the set of patent
rights in different countries for the same invention is called a patent family. The set of countries
in a patent family indicates the selection of prioritized markets by the inventing individual,
company or other agent. It is possible to assign a nationality to each patented invention based
on the nationality of the applicant, or in case of several applicants the nationality of the first
applicant named in the patent application as a proxy for national origin of the invention.
11
The selection of national markets for each patented invention of a certain nationality could then
be compared across countries of origin, calculating an index of market difference (dissimilarity)
as described in more detail below. This paper is based on data on aggregate national level, and
therefore the selection of national markets can not be studied on individual invention level.
Instead, we use the number of patent applications from a specific country of origin to different
receiving offices as a measure of the market selection. The differences in choices of markets
between different countries of origin are measured by three difference indices, as described
11
See e.g. Holgersson (2011) for a discussion of careful interpretation of patent statistics.
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
10
below. Multiple indices are used to decrease the risk of misrepresentation due to index
construction. In addition, the Herfindahl-Hirschman index is used as a measure of the market
concentration and intra-national specialization from the point of view of a specific country of
origin.
Each patented invention is classified into one main and often also into a few additional patent
classes, corresponding to technological areas, assigned to it by the patent examiner. This gives
an opportunity to construct an index of technology difference (dissimilarity) as described in
more detail below. Here we have used US as a country of reference for patenting with the
assumption that US is a highly prioritized market on average for inventors around the world.
Using US as a reference country in patent information analysis is also common in previous
research, see e.g. Patel and Pavitt (1994) and Granstrand et al. (1997). A set of difference
indices, designed analogously with the ones above, are used for measuring technological
differences as defined below.
Finally, qualitative information, mainly regarding IP legal convergence, underlying the
discussion in the paper and the interpretation of data has been collected through documents,
conference discussions and interviews (about 50) at country and company level in China,
Europe, India, Japan, Korea, and US in connection with field visits during 2010 and 2011.
3.1 Quantitative datasets
We use two datasets on aggregate national level to study market and technology convergence,
respectively. The first dataset consists of input/output matrices with receiving offices and
countries of origins for all patent applications reported to WIPO from 1995 through 2008. These
matrices were constructed from the patent statistics available from WIPO and they are primarily
used to study inter-national market convergence or reversely inter-national market
specialization. The second dataset consists of matrices with countries of origin and patent
classes for all patent applications to the USPTO from 2005 through 2009. These matrices were
constructed from the patent statistics available from the USPTO and they are primarily used to
study inter-national technology convergence or reversely inter-national technology
specialization.
3.2 Market difference indices
We introduce three different measures of differences (dissimilarities) between countries for
each dimension of inter-national convergence (or reversely inter-national specialization), i.e.
market and technology convergence. The concept of convergence in general refers to a process
in which the difference or dissimilarity between two variables (or one variable and a constant)
decreases as one or another variable (usually time) increases.
12
The first measure of market differences is a market share difference index. When comparing
two countries’ ( and ) foreign patent strategies, the total numbers of applications from and
12
In index construction in general it is desirable that a difference or dissimilarity index is a metric distance measure,
i.e. it has the triangle inequality property. E.g. the concept of technological distance between entities could then
be operationalized as done in Granstrand (1994).
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
11
, respectively, to foreign patent offices are calculated, excluding ’s and ’s applications to
and to decrease bias. Then, the shares of these applications going to the different foreign
patent offices are calculated (totaling 100%). (Domestic patent applications – i.e. applications
from country to country – are excluded, since these bias the share size of different countries
heavily due to large differences in domestic patenting strategies.) The shares of foreign
applications are then compared between countries to see the overlap of foreign patenting
strategies. Our first market difference index, the market share difference index, between two
countries, and , is then constructed by the following formula, (giving a difference or
dissimilarity metric since ):
Here is the number of foreign patent applications from country that is filed in country
divided by the number of all foreign applications from country , excluding applications to
country to reduce bias. Hence, is the share of country ’s total number of foreign
applications (excluding those to country ) that goes to country . is the total number of
countries, excluding country and country . This gives a difference index , which is 1
when there is a complete difference and 0 when there is no difference at all.
The second market difference index used here is based on a modified version of the revealed
comparative advantage (RCA), as introduced by Balassa (1965). Based on the RCA, Soete (see
e.g. Soete, 1981, 1987) and others developed the concept of revealed technological advantage
(RTA). Here we introduce the revealed market advantage (RMA) analogously to the revealed
technological advantage. RMA of country in market is then defined as:
Here is the number of foreign applications from country to receiving office , and is
the total number of countries.
13
This measure is larger than 1 for a country if the share of its
foreign patent applications to a specific receiving office (country) is larger than the share of
total foreign applications from various countries that is received by that specific receiving office
(country), and smaller than 1 if the opposite applies. Analogously with above, the RMA
difference index between two countries, and , is defined as
14
:
13
Note that since is the number of foreign applications from country to receiving office , the following holds
since a domestic patent application is not a foreign application: . Also note that this measure gives
a small error due to the fact that one of the receiving offices differs in the comparison between each pair of nations
of origin since patenting from one nation to its own patent office is excluded. However, no good way of excluding
this error has been found.
14
Note that the division by two is kept for consistency, although it does not limit the index measure to a number
between 0 and 1 in this case.
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
12
There are some problems related to this measure, since RMA can take on values between 0 and
∞ and thus is not bounded. Therefore we also introduce a third difference index, based on a
symmetric RMA, a normalization giving a symmetric index as suggested by Dalum et al. (1998)
in the case of revealed comparative advantage.
15
We thus define the revealed symmetric market
advantage, RSMA, as:
The RSMA difference index is constructed as previously:
The reason why three different indices are used is that the results from the statistical analysis
are sensitive to the index construction. The market share difference index is e.g. in many cases
mainly impacted by the largest markets, since they downplay the shares for the smaller ones. A
large increase in importance of a specific output market in general for all countries leads to a
convergence in this measure, by downplaying the differences in smaller markets. The RMA
difference index on the other hand puts more weight on the smaller markets, since these are
impacting the index as much as the larger ones. This might create an overweight in importance
for otherwise rather unimportant output markets. Therefore, using more than one index in a
sensitivity analysis reduces the risk of misrepresentation and misinterpretation.
In addition to the difference indices, the Herfindahl-Hirschman index is calculated and used as
a measure of the foreign market concentration from a specific country of origin. Thus, this is
defined in the usual way as:
Here is the number of foreign applications from country to receiving office , and is
the total number of countries. This is used as a measure of the intra-national market
specialization (or reversely market diversification, defined as in previous studies as
).
3.3 Technology difference indices
Three technology difference indices are introduced analogously with the ones above in order to
measure the technology convergence (or inter-national specialization). Our first technology
difference index, the technology share difference index, is a technology distance measure
between two countries, and , constructed by the following formula:
15
Other forms of normalizations have also been used, e.g. logarithmic transformation as in Soete and Verspagen
(1994).
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
13
Here is the share of all US patent applications from country that belong to US patent class
and is the total number of US patent classes. Hence,
where is the
number patent applications from country in patent class . This again gives a metric difference
index , which is 1 when there is a complete difference and 0 when there is no difference at
all (i.e. there is no technological distance between country and ).
The second measure of technology difference is based on the revealed technological advantage,
RTA of country in technology , as traditionally defined:
Here is again the number patent applications from country in patent class , is the total
number of patent classes, and is the total number of countries. Thus, RTA indicates whether
or not a technology’s patent share in a country is larger than the technology’s share of all patents
(across countries).
16
Note that the denominator in RTA may get arbitrarily small, e.g. for a new
technology . Thus, RTA is an unbounded measure. Based on RTA, we introduce the RTA
difference index between two countries, and :
The revealed symmetric technological advantage, RSTA, is defined as:
The RSTA difference index is introduced as previously:
Finally, the Herfindahl-Hirschman index is again calculated and used as a measure of the
technology concentration from the point of view of a specific country of origin. This is defined
as:
Here is the number of US patent applications from country in patent class , and is the
total number patent classes. This is used as a measure of the intra-national technology
16
Careful use of concepts and terminology is called for in this context. Note e.g. that:
Thus, a simple algebraic rearrangement shows that the RTA-measure also indicates if a country’s patent share in
a technology is larger than the country’s share of all patents (across technologies). Therefore, the traditional
interpretation in terms of a country’s relative technology specialization just as well could be phrased in terms of a
technology’s relative country specialization.
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
14
specialization (or reversely technology diversification, defined as in previous studies as
).
3.4 A note on the statistical tests
All difference indices are calculated for all comparison pairs of countries of origin, resulting in
unique difference indices for each year and each type of index, with number of countries
(170+, but slightly varying in the different datasets). However, in many cases data is missing,
resulting in a significantly lower number of unique difference indices, as presented in the
empirical results.
The Student’s paired t-test is used to test the change in differences between two years. For
changes in market differences, the years 1995 and 2004 are compared. The reason why 2004
was chosen as the latest year is that the WIPO statistics lag somewhat, and data from some
major countries’ patent offices, including India’s, is still not included for later years.
17
However,
for some of the descriptive statistics later years are also included. For changes in technology
differences, the years 2005 and 2009 are compared as they are the earliest and latest years with
data freely available and accessible on the USPTO website.
Even though the distributions studied in this paper in general are symmetric and unimodal, they
are not normally distributed, especially not the unbounded RTA-based difference indices.
Therefore, the Wilcoxon signed-rank test is used to complement the Student’s t-test.
4 Empirical evidence
4.1 Market convergence
Changes in three market difference indices, as described above, are used to measure inter-
national market convergence and/or specialization. The market difference indices are created
in the comparison of two countries of origins of the patent, and all comparison pairs of countries
are included in the analysis. Hence, each country of origin is compared with all other countries
of origin regarding their foreign patent applications. Since we are interested in investigating
signs of convergence, we focus on the unique country comparisons with available numbers for
both 1995 and 2004, all in all 2080 ones. We measure convergence as the change in the market
difference indices from 1995 through 2004. A positive change indicates inter-national market
specialization and a negative change indicates inter-national market convergence in patenting
patterns.
Based on the full set of market difference indices for 1995 and 2004, respectively, an analysis
of the change is performed and the results are presented in Table 1. Our statistical analysis
shows significant decreases in all three market difference indices between 1995 and 2004.
17
Missing data in WIPO’s statistics is a source of potential error in this study.
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
15
Table 1 Summary of statistical results of market convergence and concentration
n
1995 Mean
2004 Mean
Mean change
% Change
Estimated median of
change
2080
0.65578
0.51853
-0.13724***
-20.93%
-0.1647###
2080
288.7
142.0
-146.61***
-50.81%
-58.77###
2080
22.825
18.787
-4.038***
-17.69%
-4.047###
65
0.4817
0.2996
-0.1821***
-37.80%
-0.1548###
Notes:
* Mean change different from zero with 0.05 significance (paired t-test)
** Mean change different from zero with 0.01 significance (paired t-test)
*** Mean change different from zero with 0.001 significance (paired t-test)
# Median change different from zero with 0.05 significance (Wilcoxon signed-rank test)
## Median change different from zero with 0.01 significance (Wilcoxon signed-rank test)
### Median change different from zero with 0.001 significance (Wilcoxon signed-rank test)
The decreases in market difference indices indicate that there has been an inter-national market
convergence between 1995 and 2004 (i.e. that the inter-national market specialization has
decreased). Table 1 also includes results regarding the Herfindahl-Hirschman index, which is
here used as a measure of the intra-national market specialization (or reversely market
diversification) of a specific country of origin, or more specifically a measure of the market
concentration of its foreign patent applications. The results show a decline in market
concentration. These two results together indicate that countries have widened their markets for
patenting, becoming more intra-nationally diversified in terms of output markets, at the same
time as the differences between various countries of origin have decreased in terms of their
output markets, indicating inter-national market convergence.
The market concentration is further illustrated in Figure 1 where the worldwide average of the
market concentration is presented for the years 1995 through 2008 together with the
concentrations of a number of reference countries. An issue that impacts the results of the
worldwide average is the fact that new countries of origin are added and included in the average
each year. These countries commonly have little foreign patenting and therefore also quite high
concentrations of foreign patenting (and thereby inflate the average). Therefore our main
emphasis should be put on the adjusted worldwide average, since that average is constructed as
an index based on the average in the first year, and where the changes between each year are
only based on the countries with available data for both years of comparison (similar to what is
done when using for example the paired t-test).
18
18
Note that missing data from various patent offices for different years might also impact the results for different
years, but since this is only true for some small patent offices (except possibly India) this impact is expected to be
small.
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
16
Figure 1 Concentration of markets for foreign patent applications
The difference between the adjusted and the unadjusted worldwide averages of concentration
indicates that the major decline in concentration is found among countries where the foreign
patenting is a recent phenomenon (or even introduced during the period of observation). This
is indicated also by Table 2, since the countries with the largest decreases in market
concentration from 1995 to 2008 have the same size of their absolute and relative decreases
meaning that they had a Herfindahl-Hirschman index equal to 1 in 1995 (which is true only
when the foreign patenting is performed on one market only). Hence, such major decreases in
market concentration are phenomena existent among countries with limited foreign patenting
in 1995.
0,000
0,100
0,200
0,300
0,400
0,500
0,600
19951996 1997 1998199920002001 2002 2003200420052006 20072008
Worldwide
average (adjusted)
Worldwide
average
US
UK
Germany
Sweden
Switzerland
Japan
Korea
China
India
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
17
Table 2 Growth (or decrease) in market concentration from 1995 to 2008
Country of origin Abs Growth (% Growth)
Panama -0.92 (-92%)
Cuba -0.91 (-91%)
Monaco -0.88 (-88%)
Chile -0.84 (-84%)
Iceland -0.83 (-83%)
Croatia -0.82 (-82%)
Tunisia -0.80 (-80%)
Brunei Darussalam -0.79 (-79%)
Saudi Arabia -0.78 (-78%)
Singapore -0.76 (-76%)
Barbados -0.76 (-76%)
Thailand -0.70 (-70%)
Uruguay -0.67 (-67%)
Belarus -0.63 (-63%)
Indonesia -0.62 (-62%)
Malaysia -0.62 (-62%)
Vanuatu -0.61 (-61%)
Bermuda -0.60 (-60%)
Sri Lanka -0.46 (-46%)
Hong Kong (SAR). China -0.44 (-44%)
Cyprus -0.39 (-79%)
Slovenia -0.37 (-67%)
Netherlands Antilles -0.18 (-21%)
Poland -0.15 (-34%)
Canada -0.12 (-22%)
European Patent Office -0.11 (-11%)
Sweden -0.07 (-33%)
Denmark -0.07 (-30%)
New Zealand -0.06 (-25%)
Japan -0.05 (-15%)
Mexico -0.05 (-15%)
Belgium -0.05 (-24%)
United Kingdom -0.04 (-17%)
Russian Federation -0.04 (-17%)
Country of origin Abs Growth (% Growth)
Slovakia -0.03 (-19%)
Israel -0.03 (-8%)
Portugal -0.02 (-15%)
Ireland -0.01 (-9%)
Norway -0.01 (-8%)
Greece -0.01 (-7%)
South Africa -0.01 (-6%)
Cook Islands 0.00 (0%)
Côte d'Ivoire 0.00 (0%)
France 0.00 (1%)
Turkey 0.00 (1%)
Finland 0.01 (9%)
Czech Republic 0.02 (12%)
Italy 0.02 (11%)
Netherlands 0.02 (16%)
Luxembourg 0.03 (35%)
Switzerland 0.03 (44%)
Germany 0.03 (20%)
United States of America 0.04 (43%)
China 0.04 (15%)
Hungary 0.04 (36%)
Australia 0.05 (26%)
Liechtenstein 0.06 (48%)
Austria 0.06 (49%)
Brazil 0.06 (48%)
India 0.07 (21%)
Spain 0.08 (89%)
Romania 0.09 (53%)
Republic of Korea 0.10 (41%)
Ukraine 0.12 (24%)
Unknown 0.13 (104%)
Argentina 0.14 (93%)
Bulgaria 0.27 (180%)
4.2 Technology convergence
Few, if any, studies on technology convergence (or reversely inter-national specialization) have
previously been performed including data on all countries active in (US) patenting. Moreover,
previous studies have commonly used either the RTA-index or other indicators giving equal
weight to small and large technological areas. In this study we use three different indices to
control for biases due to index constructions. We use the US market as a reference market, as
it is probably the world’s most important market for patenting currently, and include data on all
available countries. The use of US as a reference market might slightly bias the measures
depending on closeness to the US, and this needs to be taken into consideration. However, in
this case the changes over time are of most interest, and therefore this bias is expected to have
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
18
little impact. We use the statistics on various countries’ patenting in the 404 different US patent
classes, and calculate three technology difference indices analogously with the market
difference indices above and as described in the methodology section above. Changes in these
indices are used to indicate inter-national technology convergence (when differences decrease)
or inter-national technology specialization (when differences increase). We base the statistical
analysis on the unique country comparisons with available numbers for both 2005 and 2009,
which amount to 3570 ones. The results are presented in Table 3.
Table 3 Summary of statistical results of technology convergence and concentration
n
2005 Mean
2009 Mean
Mean change
% Change
Estimated median of
change
3570
0.91999
0.89610
-0.02389***
-2.60%
-0.01728###
3570
609.0
681.3
72.3***
11.87%
-37.30###
3570
65.628
65.768
0.140
0.21%
0.2758#
85
0.2631
0.2021
-0.0610*
-23.19%
-0.01658#
Notes:
* Mean change different from zero with 0.05 significance (paired t-test)
** Mean change different from zero with 0.01 significance (paired t-test)
*** Mean change different from zero with 0.001 significance (paired t-test)
# Median change different from zero with 0.05 significance (Wilcoxon signed-rank test)
## Median change different from zero with 0.01 significance (Wilcoxon signed-rank test)
### Median change different from zero with 0.001 significance (Wilcoxon signed-rank test)
Our results show that there is a decrease in the technology share difference index (),
indicating technology convergence. The change in the RTA difference index () has a mean
above zero, but a median below zero. This indicates a skewness in the distribution, which has
been confirmed also by graphical analysis. Hence, the statistical results from the analysis of the
RTA difference index does neither indicate convergence, nor specialization. The RSTA
difference index (, which is a symmetric version of ) shows an (insignificant)
increase.
19
To summarize, the results mainly indicate inter-national technology convergence,
although with some signs of inter-national technology specialization according to certain
measures.
20
Finally, the intra-national technology specialization, measured by the Herfindahl-
Hirschman index, is decreasing, meaning that there is intra-national technology diversification.
Continuing to the more descriptive statistics, some interesting developments in terms of US
patents can be seen in Table 4. Many newly industrialized countries, including Korea, China
19
Interesting to note is how the normalization of the RTA-index () into the RSTA-index (), severely
reduces the significance of the statistical results, showing the sensitivity of RTA-based results to a transformation
of the unbounded RTA-measure into a bounded RSTA-measure.
20
To explain this we need to consider the index constructions. The technology share difference index () is a
measure of the differences in the shares of two countries’ patent applications in different patent classes, meaning
that the largest patent classes have most impact on the measure. The RTA and RSTA difference indices ( and
) are normalized in this regard and give equal weight to differences in all patent classes (giving larger weight
to many small classes). Therefore, we can conclude that while the differences measured with RTA and RSTA
could possibly be increasing (inter-national technology specialization), the same main technological areas (patent
classes) tend to grow larger or smaller in importance for all countries (inter-national technology convergence).
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
19
and India, have impressive GDP growths. The compounded annual growth rates (CAGR) in
constant prices between 1996 and 2009 are 4.1% for Korea, 9.8% for China, and 6.8% for
India
21
. However, their growths in US patenting and patent productivity measured as granted
patents per capita are even steeper than their GDP growths (although from very low levels), see
Table 4. The CAGRs of the number of patents granted in the US over the same time period are
14.6% for Korea, 31.7% for China, and 25.6% for India. Brazil and Russia on the other hand
do not show similar increases in patent rankings or patent productivity, although they had fairly
high levels initially in the studied time period compared to some of the other NICs.
The climbing of China and India on the rankings of foreign US patentees is even more
noteworthy due to their still comparatively low patent productivity. Hence, there is still room
for a continued growth. If China would have had the same productivity as e.g. Sweden in 2009,
China would have been granted approximately 150 000 US patents. Another interesting fact is
that if the growth of granted patents between 1996 and 2009 continues with the same pace
22
,
China will pass Japan as the top foreign country in terms of the number of US patents per year
within approximately 12 years, i.e. around 2020, which is a year targeted in China’s long term
science and technology (S&T) development plans for the transition into an innovation-oriented
economy. China will then not only be an economic superpower (as is already the case as proved
by China passing Japan as the world’s second largest economy after the US in 2010), but also
an innovative superpower. The legal changes in China in terms of IPRs as discussed below will
here play an important role, and one can actually talk about future IP superpowers, as IP is
likely to become even more important in the future world economy.
The recent developments in China and India leads to a related question: Which are the
technological areas in which China and India increase their patenting the most? This question
is addressed in Table 5 and Table 6 where the patent classes in which absolute patenting has
increased the most from these countries are listed. Note that the majority of the patent classes
are related to electronics and information and communication technologies (ICTs). Part of the
explanation for this might be a relatively high propensity to patent in hi-tech industries, see e.g.
Brouwer and Kleinknecht (1999). Also note that eleven out of the top 20 patent classes in these
countries are on both lists. This gives an illustration to the conclusion above, namely that the
same patent classes tend to grow large throughout the world.
Table 4 Top twenty foreign countries regarding number of patents granted in the USA in the period 1996-
2009, including patents per million capita
Rank
Country
1996
Per M capita
Country
2003
Per M capita
Country
2009
Per M capita
1.
Japan
23053
183
Japan
35515
279
Japan
35501
279
2.
Germany
6818
83.3
Germany
11444
139
Germany
9000
109
3.
France
2788
46.6
Taiwan
5298
-
Korea
8762
181
4.
UK
2454
42.2
Korea
3944
83.6
Taiwan
6642
288
21
Calculations are based on UN statistics.
22
Japan: 3.4% per year, China: 32% per year.
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
20
5.
Canada
2232
75.4
France
3868
62.4
Canada
3655
108
6.
Taiwan
1897
-
UK
3631
60.9
UK
3175
51.6
7.
Korea1)
1493
33.2
Canada
3427
108
France
3140
48.9
8.
Italy
1200
21.0
Italy
1722
29.7
China
1655
1.25
9.
Switzerland
1112
157
Sweden
1521
170
Israel
1404
196
10.
Sweden
854
96.5
Netherlands
1325
82.0
Italy
1346
22.5
11.
Netherlands
797
51.3
Switzerland
1308
178
Netherlands
1288
77.6
12.
Belgium
488
48.3
Israel
1193
185
Australia
1221
57.3
13.
Israel
484
87.5
Australia
902
45.3
Switzerland
1208
160
14.
Australia
471
25.7
Finland
865
166
Sweden
1014
110
15.
Finland
444
86.6
Belgium
622
60.3
Finland
864
162
16.
Austria
362
45.5
Austria
592
72.8
India
679
0.567
17.
Denmark
241
45.9
Denmark
529
98.2
Belgium
594
55.8
18.
Spain
157
3.98
Singapore
427
103
Austria
503
60.1
19.
Norway
139
31.7
India
342
0.312
Singapore
436
92.0
20.
Russia2)
116
0.782
Spain
309
7.38
Denmark
390
71.3
22. Singapore
88
24.5
21. China
297
0.233
24. Russia
196
1.39
25. Brazil
63
0.384
24. Russia
203
1.40
28. Brazil
103
0.532
27. China3)
46
0.0383
27. Brazil
130
0.716
30. India
35
0.0360
Notes:
1) Korea = Republic of Korea (South Korea)
2) Russia = Russian Federation
3) China, mainland excl. Hong Kong
Sources: USPTO statistics on patents, UN statistics on populations
Besides the absolute increase of patent numbers in these classes, an important observation is
that at least China’s patent shares increased steeply over the short time between 2005 and 2009.
In e.g. the heat exchange patent class, China’s patent share has grown from 0.5% to 9.6%.
China’s average increase in patent shares between 2005 and 2009, averaged over all 404 patent
classes, is 0.56%-units, while China’s share of foreign patent applications in the US during the
same time has increased more than threefold from 0.58% to 1.95% (with a similar increase in
the share of foreign granted patents in the US).
India’s patenting does not grow as fast as China’s. India’s average patent share over all different
classes has even decreased with 0.10%-units. However, India’s share of foreign patent
applications in the US has in this short time period increased from 0.56% to 0.80% (again with
a similar increase in the share of granted patents).
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
21
Table 5 Top 20 US patent classes where China has increased its patenting the most between 2005 and 2009
Absolute numbers
Patent shares
Patent
class
Ranked after increase in absolute numbers
2005
2009
Growth
2005
2009
Growth
(%-units)
361
Electricity: Electrical Systems and Devices
8
128
120
0.55%
6.05%
5.49%
439
Electrical Connectors
54
145
91
2.99%
7.02%
4.03%
370
Multiplex Communications
6
85
79
0.22%
1.61%
1.39%
382
Image Analysis
5
55
50
0.37%
2.10%
1.74%
707
DP: Database and File Management or Data Structures (Data
Processing)
6
47
41
0.49%
1.64%
1.15%
324
Electricity: Measuring and Testing
2
30
28
0.12%
1.73%
1.61%
345
Computer Graphics Processing and Selective Visual Display
Systems
5
32
27
0.25%
1.24%
0.99%
709
Multicomputer Data Transferring (Electrical Computers and
Digital Processing Systems)
3
29
26
0.19%
0.88%
0.69%
362
Illumination
6
31
25
0.63%
2.31%
1.68%
438
Semiconductor Device Manufacturing: Process
9
34
25
0.20%
0.69%
0.49%
713
Support (Electrical Computers and Digital Processing Systems)
1
26
25
0.10%
1.39%
1.29%
165
Heat Exchange
2
24
22
0.47%
9.56%
9.09%
378
X-Ray or Gamma Ray Systems or Devices
3
25
22
0.65%
3.58%
2.93%
327
Miscellaneous Active Electrical Nonlinear Devices, Circuits, and
Systems
1
21
20
0.09%
1.70%
1.61%
455
Telecommunications
6
26
20
0.26%
0.77%
0.51%
340
Communications: Electrical
1
20
19
0.07%
1.07%
1.00%
375
Pulse or Digital Communications
9
28
19
0.57%
1.23%
0.66%
714
Error Detection/Correction and Fault Detection/Recovery
1
20
19
0.09%
0.96%
0.87%
379
Telephonic Communications
1
19
18
0.11%
2.44%
2.33%
532
Organic Compounds (includes Classes 532-570)
5
23
18
0.24%
0.83%
0.60%
Avg. for all classes:
0.56%
Source: USPTO statistics
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
22
Table 6 Top 20 US patent classes where India has increased its patenting the most between 2005 and 2009
Absolute numbers
Patent shares
Patent
class
Ranked after increase in absolute numbers
2005
2009
Growth
2005
2009
Growth
(%-units)
714
Error Detection/Correction and Fault Detection/Recovery
2
43
41
0.17%
2.06%
1.89%
707
DP: Database and File Management or Data Structures (Data
Processing)
6
43
37
0.49%
1.50%
1.01%
370
Multiplex Communications
7
37
30
0.26%
0.70%
0.45%
375
Pulse or Digital Communications
2
23
21
0.13%
1.01%
0.89%
532
Organic Compounds (includes Classes 532-570)
61
78
17
2.88%
2.82%
-0.05%
711
Memory (Electrical Computers and Digital Processing Systems)
9
23
14
0.70%
1.44%
0.74%
709
Multicomputer Data Transferring (Electrical Computers and
Digital Processing Systems)
12
24
12
0.76%
0.73%
-0.03%
713
Support (Electrical Computers and Digital Processing Systems)
2
13
11
0.20%
0.70%
0.49%
710
Input/Output (Electrical Computers and Digital Processing
Systems)
0
10
10
0.00%
0.92%
0.92%
717
DP: Software Development, Installation, and Management (Data
Processing)
7
17
10
1.50%
2.05%
0.55%
382
Image Analysis
6
15
9
0.44%
0.57%
0.13%
715
DP: Presentation Processing of Document, Operator Interface
Processing, and Screen Saver Display Processing (Data
Processing)
4
12
8
0.55%
0.89%
0.35%
365
Static Information Storage and Retrieval
3
10
7
0.15%
0.42%
0.27%
455
Telecommunications
3
10
7
0.13%
0.30%
0.17%
327
Miscellaneous Active Electrical Nonlinear Devices, Circuits, and
Systems
9
14
5
0.85%
1.13%
0.29%
705
DP: Financial, Business Practice, Management, or Cost/Price
Determination (Data Processing)
4
9
5
0.52%
0.46%
-0.06%
708
Arithmetic Processing and Calculating (Electrical Computers)
1
6
5
0.43%
2.14%
1.71%
718
Virtual Machine Task or Process Management or Task
Management/Control (Electrical Computers and Digital
Processing Systems)
1
6
5
0.56%
2.30%
1.74%
726
Information Security
0
5
5
0.00%
0.51%
0.51%
340
Communications: Electrical
0
4
4
0.00%
0.21%
0.21%
Avg. for all classes:
-0.10%
Source: USPTO statistics
5 Discussion and managerial implications
In summary, our empirical results indicate:
1. Continuous growth of international patenting.
2. Inter-national market convergence of patenting according to all our indicator tests.
3. Inter-national technology convergence according to some of our indicator tests.
4. Decreases in both market and technology concentrations of patenting, i.e. increasing
market diversification as well as technology diversification.
For detailed interpretations of these results, the importance of definitions and
operationalizations of intra-national diversification/specialization, and inter-national
convergence/specialization must be kept in mind. Inter-national technology specialization
defined and measured by RTA and RSTA indicators is by and large prevalent according to
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
23
many previous studies. However, since the RTA and RSTA types of operationalizations mainly
used in previous studies of inter-national technology specialization are normalized in a way that
gives equal weight to all technological areas, large as well as small, the trends in the most
important technological areas are possibly given too limited emphasis in those studies. Thus
RTA and RSTA indices could lead to overemphasis on technology specialization, especially if
technology concentration is high with a long thin tail. One ought therefore to be cautious when
interpreting results and drawing managerial implications based on only the RTA and RSTA
difference indices. Depending on how technological areas are defined (e.g. depending on which
level the patent classes are defined in a hierarchical patent classification system) there can be
more or less biased effects. The more narrow the classification, the more emphasis is likely put
on small technological areas. In this study 404 classes of US patents are used, which must be
considered a narrow classification, and therefore our technology share difference index does
more adequately express the trends in the largest (in terms of patenting) technological areas,
then showing increasing similarities between countries in such terms.
23
Further, it should be noted that inter-national market convergence and inter-national technology
convergence could conceivably be negatively correlated. If consumption patterns converge
throughout the world at the same time as different countries become increasingly
technologically specialized relative to each other, the relative importance of various output
markets for different countries of origin will likely converge (inter-national market
convergence). On the other hand, if industries across countries increasingly work in similar
technological areas, i.e. in case of inter-national technology convergence, this could
conceivably promote market specialization across countries rather than market convergence.
As the results indicate, intra-national market diversification as well as technology
diversification increases. This in turn indicates an expansion of both the market base (set of
output market areas) and the technology base (set of areas of technological inputs) for various
countries. Contrary to what one could expect from a competition point of view, this
expansionary process is in turn co-evolving with both market convergence and (based on our
index) technology convergence. Management in major industries in various countries then
seems to adopt the strategy to compete in similar major market areas and in similar major
technological areas. This in turn likely leads to more competitive encounters between
companies of different nationalities and to the extent that these companies in turn are
multinational to more competitive encounters between the same leading MNCs from various
countries across markets and technologies. The resulting impact of these encounters upon
marketing management and technology management is then conceivably leading to even more
increased management convergence, at least in certain management aspects, everything else
equal. If managerial strategies and skills are decisive for survival in competitive games,
competitive exclusion would then likely eliminate inferior management and less than best
practices in case of sustained market and/or technological convergence. As for developing
23
One could possibly then counter-argue that the technology share difference index used here gives too much
weight to patent intensive technological areas and too little weight to other areas. This leads us to emphasize the
need for further research with a more axiomatic approach to index construction to reduce bias.
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
24
countries catching up, some scholars argue that technology management skills for imitative
catch-up are different from innovation management skills. However, in the case of Japan, there
have been few signs of substantial differences of that kind, and few signs of any economic
importance of such differences in a transition to a more innovative stage (Granstrand, 1999).
The trend toward more open innovation, which is an inherent feature of catching up, is likely
reinforcing such a development pattern.
One management area linked to technology management in particular, but also to marketing
management, is IP management. In light of the significant growth of patenting in general and
international patenting in particular, the strong growth of international technology licensing,
and on top of that the international dispersion of patentees, IP management becomes
increasingly important and then as a corollary multinational IP management, including
management of licensing and international technology trade (see e.g. Arora et al., 2001, and
Granstrand, 2004). Moreover, internationalization of R&D and technology sourcing and
exploitation likely increases internationalization of IP operations. As the multinational
competitive encounters increases internationally, and the patents to support technology-based
businesses not only increase in volume and importance but also become increasingly dispersed
across more players, the so called IP assembly problem becomes more complex and costly to
manage.
24
This in turn requires technology management skills in responding to patent blockage
by various technology acquisition strategies, like licensing, cross-licensing, patent pooling,
invent around R&D, etc. together with various IP legal strategies.
Technology and market diversification and convergence with more localized technology
specialization moreover likely lead to more open innovation and collaborative encounters, and
collaborative encounters also increases the need for skills in IP management, including skills in
coping with the IP assembly problem and the IP sharing problem. Finally, previous studies
show a strong positive correlation between technology diversification and economic growth at
company level in various countries.
25
If now there is technology and market convergence in
addition to technology diversification, a prediction is that economic convergence will increase.
This is a testable hypothesis that falls outside the empirical scope of this paper to probe, and is
thus suggested for further research.
As to technology, market and management convergence in relation to IP legal convergence,
multinational IP management has to deal with differences in IP legal systems across countries,
which increases management costs. If these systems converge, there will be substantial cost-
savings and a likely increase in IP management convergence as well.
There are in fact indications of convergence of IP legal systems, albeit at a slow pace. The
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and its World
Trade Organization (WTO) enforcement has on average strengthened the often weak IP regimes
24
The IP assembly problem refers to the problem to assemble the necessary IPRs in order to do business, see
Granstrand (1999).
25
See e.g. Cantwell et al. (2004) and Granstrand et al. (1992, 1997) for studies of the links between increasing
technological diversification, increasing in-house R&D together with increasing external technology acquisition,
i.e. increasingly open innovation, and economic growth.
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
25
in developing countries, inducing an upward convergence to levels in developed countries who
exercise external pressure on developing countries to switch to a strong IP regime. Internal
conditions within developing countries may however induce them to try to choose a suitable
transition time period for switching from a weak to a strong patent system and appropriation
regime. Since the patent system is not very industry specific (i.e. it is a “one size fits all” type
of system, criticized among others by Thurow, 1997) and development stages of industries may
differ widely in developing countries, the optimal timing of such a switch or transition is hard
to find and is in addition likely to be subjected to industry lobbying. Nevertheless, as countries,
industries and companies climb the development ladder(s), i.e. move ahead from a more
imitative catch-up stage to a more innovative forging ahead stage, it is likely that from a national
economic point of view the aggregate benefits from a strong IP regime (e.g. in attracting inward
foreign direct investments in R&D and hi-tech production, incentivizing domestic R&D
investments and technology trade, as well as reducing imitation from countries trailing behind
technologically) at some point on average outweigh the benefits from a weak IP regime (e.g.
incentives for imitative entrepreneurship, piracy, counterfeiting and domestic diffusion of new
technologies).
26
27
This strengthening of IP regimes for domestic economic purposes has taken place in Japan and
Korea and is clearly taking place in China and India. All these countries have with varying time
lags recognized the importance of indigenous innovation for economic development and have
subsequently introduced various innovation inducing policy measures, including the
strengthening of the IP regime and the IP legal system. One may even venture to say that IP
policies and IP issues at large have gradually become more closely linked to innovation issues
than to traditional trade issues in these countries.
28
Russia is a bit of a special case with a
recently developed patent system, much patterned on Western ones, but still with very little
patenting by domestic industry and very little IP litigation. It is also noteworthy in this context
that few if any countries with an open economy have historically been able to effectively catch-
up technologically in the presence of a strong IP regime domestically and abroad. Neither has
any country (in an open economy) been trying, let alone been able to, forge ahead with a weak
IP regime domestically, after once having caught-up.
The case of China is of special interest for various reasons. China introduced new patent laws
in the 2000s, just as Brazil and India (see e.g. Li, 2010 and Mukherjee, 2006). These laws
essentially strengthen the patent system, needless to say for national economic purposes.
29
26
The role of strong IP regimes for attracting inward FDIs has been studied empirically by e.g. Mansfield (1994,
1995) and the role of strong IP regimes for economic growth by e.g. Park and Ginarte (1997).
27
Some form of co-existence of strong and weak parts in different industries or regions is feasible, at least
temporarily.
28
Traditionally trade related issues mostly concern trade on product markets (e.g. piracy, counterfeiting, parallel
imports, and access to medicines) rather than trade on technology markets.
29
Throughout the whole history of patent system developments, changes have frequently been enacted with
protectionist purposes. A major example is the US switch to a much stronger pro-patent era in the early 1980s as
a response to Asian competition, a switch that subsequently led to substantial strengthening of the IP systems
worldwide. The patent system in fact opens up many possibilities to opportunistic protectionist behavior. E.g. at
the detailed level of inventive step requirements for patentability of an invention in a country, a high step
requirement may be used by a developing country to be able to more freely reject patent applications from abroad,
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
26
China is then in a mixed mode of actual IP enforcement, being weak in some areas and regions
and strong in others. Foreign companies and countries have prepared a certain set of strategies
for appropriating invention benefits in a weak IP regime in China (see e.g. Keupp et al., 2010),
while being less prepared for a new strong IP regime. In general, Western technology and
marketing management then tend to be more concerned about appropriation strategies in weak
IP regimes than the long-term competitive implications of increasing IP portfolios and IP
management skills in countries that switch from weak to strong IP regimes.
Finally, as to economic convergence as an overarching issue at macro level, it is hard to
conceive of a world with sustained absence of economic convergence in the presence of
convergence in other essential dimensions, including technology, market, management, and
legal convergence. Economic convergence could on the other hand conceivably be present in a
world with absence of some or all of technology, market, management, and legal convergence.
One may e.g. conceive of a world with countries with planned or market economies, common
or civil law systems, East or West management styles, specialized technologies and specialized
markets. To the extent that competitive forces, including competition between economic
systems, can play out such a world is not likely sustainable, again with an, admittedly general,
reference to competitive exclusion. Openness of economies – enabling economies of scale,
larger returns on R&D, more R&D spill-overs, and more efficiency-inducing effects from cross-
border mobility of resources – is sufficient for competitive exclusion to play out on a global
level. However, openness of an economy is not a necessary condition as demonstrated by the
breakdown of the Soviet empire under pressure from military competition, inferior
technological innovativeness and economic ineffectiveness. Theoretically seen, equilibria with
multiple optima along a development path is not likely to be stable, and practically seen, history
has no clear illustration of that.
6 Conclusions
This paper addresses various dimensions of convergence in a global context – market,
technology, management, legal, and economic convergence. An empirical analysis of market
and technology convergence based on worldwide patent statistics has employed both new and
old measures of convergence, specialization, and diversification of markets and technological
areas among the world’s countries. In addition field studies in Asia, Europe, and US with a
focus on innovation and IP policies and management have been conducted. We may conclude
that there are indications of global convergence in form of inter-national market convergence
and to a certain extent inter-national technology convergence and IP legal convergence,
together with intra-national market and technology diversification. This is in contrast to some
previous research indicating increasing technology specialization. Market, technology, and IP
legal convergences in turn likely imply increased convergence of multinational technology
management, and then IP management, as an increasingly important part thereof. Whether these
and a low step requirement may be used by a developed country to allow for patent strategies such as flooding
(blanketing or thicketing) and evergreening by domestic large firms with numerous minor product and process
improvements (see Granstrand 1999b, 2003).
Granstrand, O. and Holgersson, M. (2014) ‘Multinational technology and intellectual property management - Is
there global convergence and/or specialization?’, International Journal of Technology Management, Vol. 64,
No. 2/3/4, pp. 117-147.
27
developments will lead to increased economic convergence is difficult to say on the basis of
our current knowledge, but a testable hypothesis suggested for further research is that so is the
case.
As to managerial implications, global developments of the sort discussed in this paper calls for
increasing skills in multinational intellectual property management (IPM), increasingly
becoming a core skill in multinational technology management (e.g. in licensing and litigation).
This managerial implication is valid for both developed and developing countries. Increasing
technology- and innovation-based competition from ANICs should then be of more concern for
technology management in industrialized countries (ICs) than short-term concern over piracy,
free-riding, counterfeiting, parallel imports, and other related issues. A companion policy
implication, briefly put, is that countries around the world should worry more about innovation
related IP issues than about traditional trade related IP issues in the years to come.
Acknowledgements
The work with this paper has been conducted under the auspices of IMIT (Institute for
Management of Innovation and Technology) at Chalmers University of Technology within the
project “Management, Economics and IP Law of Open Distributed Innovation Processes”,
financed by the Swedish research and innovation funding agency Vinnova. Comments from
John Cantwell and two anonymous reviewers are gratefully acknowledged.
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