ABSTRACT
The work is centered on the effect of IP management on Performance of selected Manufacturing Firms in South East Nigeria. The objectives of the study are; To determine the extent to which protection of intellectual property through trade mark affects the market share in manufacturing firms in the south east Nigeria; To ascertain the degree to which patents induce creativity in manufacturing firms in the same zone; To establish the level to which intellectual property protection fulfills its mission in manufacturing firms; To analyze the various risks involved in intellectual property registration to see if they are higher than expected benefits; To find out the extent to which corporate managers are involved in the management of intellectual property portfolio in their firms and the implications of their involvement especially in the south east Nigeria. The location of the study is the South East Nigeria comprising of Abia, Anambra, Ebonyi, Enugu and Imo states. Seven selected firms were used for the study and they consist of a population of 2258 employees. Exuastive sampling technique was applied to the managerial cadre of the population. Out of the total population, the managerial staff is made up of 644 employees out of whom 604 were qualified to be used for the empirical study. The companies are; Pittasson Industries Ltd., Alo Aluminium Manufacturing Industry Nig ltd, Hardis and Dromedas Ltd, General Cotton Mill Ltd, Ofali Rural Industries Ltd, and Jacobs Wine Nigeria Ltd. Primary data were collected through questionnaire structured in 5 point Likert scale and were complemented with oral interview. Again, secondary data were collected through findings from available literature from works of other authors. Analysis of the data was done using statistical tools of Chi Sq, Pearson Product Correlation Coefficient and Z test used to compare the sample and population mean. Other tools like frequency tables, percentages and statistical package for social science research (SPSS) were also adopted. Hypotheses 1 and 5 are to be tested with Friedman Chi square. This tool is commonly used to compare observed data and expected data. Hypothesis 2 and 3 are to be tested with Pearson Product Correlation Coefficient Hypothesis 4 will be tested with the z-test. The z-test tool compares sample and population means to determine if there is a significant difference between the variables.This is seen in the statistical significance of (X2c =19.016, p,< .05). Secondly, patents rights induce creativity in manufacturing firms, (r =. 955, P<.05).Intellectual property fulfills its mission in manufacturing firms r = .728 > r= .195 Thus (r =.728, P<.05) It was also discovered that management of intellectual property is usually done by legal practitioners, (xc2 = 213.932>xt2 =26.30). Also discovered is the fact that, when intellectual property rights are used together with other forms of protection, it yields maximum benefit. Lastly, the benefits that are accruable by the use of intellectual property are higher than the risks involved in IP registration, (Zc =11.517>Zt = 1.96). The study then concludes that contrary to the seemingly believe that protection of IP through the use of IPR does not contribute to an organizations success, it does actually positively impact on the organizations performance to a significant level. The recommendation therefore is that firms should in addition to other strategies, recognize their intellectual properties, and adopt the use of IP rights to protect them. Another recommendation is that IP should be managed strategically by the right personnel which from the findings of the author are the corporate managers.
TABLE OF CONTENTS
Declaration i
Approval ii
Dedication iii
Acknowledgements iv
Abstract v
List of tables vi
List of figures vii
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of the Problem 7
1.3 Objectives of the Study 11
1.4 Research Questions 12
1.5 Research Hypotheses 12
1.6 Significance of the Study 13
1.7 Scope of the Study 13
1.8 Profile of Selected Organizations 14
1.9 Operational Definition of Terms 18
References 20
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.0 Introduction 22
2.1 Conceptual Framework 22
2.1.1 Concepts of Intellectual Property 22
2.1.2 Concepts of Intellectual Property and Performance 23
2.1.3 Concepts of Intellectual Property as an Intangible Asset 28
2.1.4 Concepts of Intellectual Property Rights and the importance of its Protection 29
2.1.5 Intellectual Property Rights and Policies 31
2.1.6 The Role of Intellectual Property in the Innovation Process 35
2.1.7 The Role of Intellectual Property in the Innovation Process 38
2.1.8 The Concept of Knowledge: Knowledge Flows, Creativity and Innovation 40
2.1.9 The Concept of Management 44
2.1.10 Concept of Manufacturing Companies 48
2.1.11 Management of Intellectual Property as an Intangible Asset 50
2.1.12 The Decision to Innovate 52
2.1.13 Intellectual Property Valuation 54
2.1.14 How can Intellectual Property Enhance the Market Value of your
Manufacturing Firms? 55
2.1.15 Types and Functions of Intellectual Property Rights 56
2.1.16 Industrial Design 57
2.1.17 Patent 58
2.1.18 Trade Mark 59
2.1.19 Trade Secret 60
2.1.20 Copy Right 60
2.1.21 Traditional Knowledge 62
2.1.22 Geographical Indications (GI) 62
2.1.23 Economic Value of Intellectual Property 63
2.1.24 Assessment and Control of Intellectual Property in Nigeria 65
2.1.25 Intellectual Property Theft in Organizations; who they are and when they steal 66
2.1.26 The World Intellectual Property Organization (WIPO) 72
2.1.27 World Trade Organization (WTO) 72
2.2 Theoretical Review 72
2.2.1 Theoretical Perspective 72
2.2.2 Theories of Intellectual Property 73
2.2.3 Theories of Performance 76
2.3 Empirical Review 81
2.4 Conceptual/Theoretical Framework 108
2.5 Gap in Literature 111
2.6 Contribution to Knowledge 112
References 114
CHAPTER THREE: METHODOLOGY
3.1 Introduction 125
3.2 Research Design 125
3.3 Sources of Data 126
3.4 Population of the Study 127
3.5 Sample Size Determination 127
3.6 Research Instrument 128
3.7 Sampling Technique: 129
3.8 Data Analysis Technique 129
3.9 Validity of the Research Instrument 129
3.10 Reliability of the Research Instrument 130
References 131
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Introduction 132
4.2 Data Presentation and Analysis 132
4.3 Oral Interview Analysis 149
4.4 Test of Hypotheses 152
4.5 Discussion of Findings 158
4.6 Discussion of Findings Relating to the Objectives 160
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
- Summary of Findings 167
- Conclusion 168
- Recommendations 169
- Limitations of the study 170
- Suggestion for further studies 171
Bibliography 172
Appendixes 185
LIST OF TABLES
Table: 2.1 Estimated Proportions of Firms that always usually or frequently need to make Unofficial Payments; by Firm Size 50
Table 2.2 Showing Number of patents Registration and Percentages of Countries 68
Table 2.3 Number of patents Applications for Africa, Canada, Japan, United Kingdom and United States for year 2000 to 2011 69
Table 2.4: Representing the Relative percentages of Patent Registration of each Country with Africa being less than 1% 71
Table 3.1 Organisations and Number of Employees. 127
Table 3.2: Managerial Cadre of the Firms under Study. 128
Table 4.1 Distribution on the Response and Non Response Rate of the Instrument Administered 132
Table 4.2 Distribution of the Respondent’s Gender (Male/ Female) 133
Table 4.3 Marital Status of Respondents 133
Table 4.4 Age Distribution Table 134
Table 4.5 Educational Background of Respondent 135
Table 4.6 Duration of Service of Respondents in the Firms 135
Table 4.7 Management Cadre Distribution Table 136
Table 4.8 Trade mark, Copyright, Patent and Market Change 137
Table 4.9 Brand Signature and Market Strength 137
Table 4.10 Performance Track and Intellectual Property 138
Table 4.11 Trademark, Copyright, Trade Secret and Imitation 138
Table 4.12 IPR and Market Index 139
Table 4.13 Industrial Designs, Non-Disclosure and Market Share 139
Table 4.14 Patent Law and Technology Innovation 140
Table 4.15 Patent Rights, Innovation and Technology 141
Table 4.16 Research and Development Departments and Creation 141
Table 4.17 IPR Acquisition, Invention versus Improved Performances 142
Table 4.18 IPR and Firms Mission 142
Table 4.19 Intangible Assets versus Exclusive Right 143
Table 4.20 Profit, Market Share and Sustainability 143
Table 4.21 Trademark, Brand Signature and Firms Success 144
Table 4.22 Profit and Copy Right 145
Table 4.23 IP Risks and Benefits 145
Table 4.24 Creation, Invention Innovation and Intangibles 146
Table 4.25 Creation, Invention, Innovation and Performance 146
Table 4.26 Cost of Registration versus Benefit 147
Table 4.27 Corporate Managers versus IP Management 148
Table 4.28 IP Portfolio Management and Legal Practitioners 148
Table 4.29 IP Portfolio Management and Strategic Management 149
Table 4.30 Creation and Recreation versus Management 149
Table 4.31 Mission, Vision, Goal and Performance 150
Table 4.32 R&D versus Growth 150
Table 4.33 Oral Interview Distribution 151
Table 4.34 Analysis of Oral Interview 154
Table 4.35 Chi-square Test 155
Table 4.36 Descriptive statistics 156
Table 4.37 Correlation 156
Table 4.38 Descriptive statistics 157
Table 4.39 Correlation 157
Table 4.40 Descriptive Statistics for Hypothesis 4 158
Table 4.41 One Sample Kolmogrove Smirnove Test 160
Table 4.42 Chi Square Test for Hypothesis 5 160
LIST OF FIGURES
Fig: 2.1 Performance Management Cycles 47
Fig: 2.2 IP Management Framework 51
Fig: 2.3 Types of IP Rights 57
Fig: 2.4 Line Graph Representing the Patent Registration of IP in the
Countries Mentioned. 69
Fig: 2.5 Bar Chart Representing the Patent Registration of IP in the Countries Mentioned 70
Fig 2.6 Model Plan to Facilitate Intellectual Property Management for Improved Performance 113
Fig: 4.1 Bar Chart of Distribution Response 131
Fig 4.2 Bar Chart for Gender Distribution 132
Fig 4.3 Marital Statuses of Respondents 133
Fig 4.4 Bar Chart Representing the Educational Background of Respondents 134
Fig 4.5 Bar Chart for Management Cadre Distribution 136
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Since the beginning of 20th century, the world has witnessed astronomical advancement in scientific and technological innovation which has changed the face of modern society. Innovation has become the key driver of economic growth and development in both medium term and long term. Kubis(2011) defines innovation as the process of introducing new products, and services, and production process into the marketplace and creating new profitable enterprises and higher paying jobs on this basis. The popular documentary on “Cable Network News” of Make, Create and Innovate” is one of the indications of the importance of innovation in today’s world. Even the most read book in the world; the holy Bible establishes it in King James Translation of Revelation, 21: 5; “Behold, I make all things new”. Innovation is thus about having new ways of doing things which usually will emanate from ideas generated by individuals and groups of individuals in their various works of life and even in their everyday life. When these ideas are put into use or into tangible items for use in creation of wealth and other economic value, they become Properties of Intellect.They are thus called Intellectual Property (IP).
The term Intellectual Propertycame to lime light in the 19th century. By late 20th century, it became a common place in US literature. Nevertheless, Grant(2010)notes that, the usage of the term goes back as far as 1893, at the founding of Swiss federal office for intellectual property. The Paris convention for protection of industrial property (1883) and Berne convention for protecting of library and artistic work (1886) both were separate administrative offices that merged in 1893 and adopted the term intellectual property in their new title (Ige, 2000). Prior to that adoption, towards the end of the 19th century, inventive new ways of manufacturing helped trigger large scale industrialization accompanied by such phenomena as rapid city growth, expansion of railway network, investments of capital and growing trade transaction. Idris(2012) states that the invention of movable typing and printing press by Johamas Gutenberg around 1440 contributed to the birth of the first copyright system in the world. Sople, (2010) explains that Trademarks are believed to date back to at least 3500 years when potters’ marks were used to identify the source of earthen pots. However, jurisdiction and statutes for the protection of trademarks appear to date back to only 350 years, i.e. seventeenth century in England.
Right from the medieval to several years over, intellectual property started developing. In Roman times, it was common for pottery to be embossed or impressed with a mark, for example a representation of a dolphin or the maker’s initial. Merchant’s marks were used in commerce in Britain from the thirteenth century. William Caxton used the mark W74C, in his Gold and Silver articles and these were hallmark as early as the fourteenth century. By the end of the sixteenth century it was very common for shopkeepers to erect signs illustrating their trade (Nwokocha, 2012). Traders took to using cards bearing their name and address, often accompanied by a device of some sort, an early form of what we have today as business card. The industrial revolution saw an enormous growth in the use of names and marks in advertising and thus modern trade mark was born. This marked the early development of the modern Trademark Law.
In the area of patent, the first recorded patent for an industrial invention was granted in 1421 in Firenze, Italy to Architect and Engineer Filippo Brunelleschi. The claim was that he had thought of a better method for transporting goods on the River Aron. He undertook with the Florentine authorities that to divulge details of his new invention he would be granted a monopoly in respect of the exploitation of the invention within Firenze for a number of years (Nwokocha, 2012). After this, any person would be free to exploit the invention or introduce further improvements to the technology.
Copyright awareness on the other hand, arose with the growth of the printing press, and the need for the authors and publishers of popular works to profit for their task. In 1709 the UK Parliament enacted the world’s first Copyright Act, the so-called Statue of Anne. This Act established principles of copyright law which remain valid today and have developed to the current Copyright laws existing in most countries.
Subsequently, the United National Bureau for protection of intellectual property relocated to Geneva in 1960 and in 1967 the World Intellectual Property Organization (WIPO) was established by a treaty as an agency of the United Nations. The establishment of WIPO naturally led to sensitization, awareness and growing interest in intellectual property protection. Companies started investing in research and development. The evolution reveals the emergence of 3 basic trends in intellectual property; Research, Development, and Innovation over the decades that follow. Idris (2012: 19) identifies these trends as follows:
- Protection has been strengthened, broadened and harmonized internationally especially in the 1980’s
- The number of applicants and grants has risen exponentially between 1980’s and 2001 as compared to the previous period especially in United States and United Kingdom. Basically two technical fields contributed to these surge, Information and communication technology, (ICT) and Biotechnology.
- Innovation has also expanded rapidly. An important indicator is the increase in research and development spending,
Today, intellectual property is a value concept. It forces us to acknowledge value conflicts in public policies of various governments and firm’s and also conflicts of value in inventions, creations and innovations.For many firms in this modern economy, intellectual property is their most important asset not physical property. Companies engage in acquisition of intellectual property due to various reasons. Such reasons as the expected benefit that is accruable to it. Some of these benefits they believe will have a positive effect on the performance of the company and the various indices of performance. This includes the productivity of the firm, profitability, sustainability, and long term viability of the organization. Marrand Neely(2003) argue that a firm’s value is often partly based on the intangible intellectual capital which is referred to as intellectual property that it possesses.
Just like the physical properties, intellectual properties also need to be protected. Countries usually establish a system whereby these properties are managed in order to not only benefit those that generated the ideas leading to the establishment of these properties, but also to be used as an economic tool.Northern Italy is said to be the cradle of intellectual property system. In recent time however, more emphasis is being placed on such properties rather than physical properties. It is necessary to note here that even though the term is increasingly used today, it is still little understood. For too many people, it is still an obscured legal concept of little relevance to everyday life. In most developing countries, intellectual property is a novel concept especially for manufacturing companies and public research institutes.Yet when these properties are introduced, they need to be established, protected and generally managed by the inventors, owners and other stake holders like managers and operators of industries. Secondly, the process of protection of these new products cannot again be effectively established without a well-balanced, affordable and reliable system of management thus the management of Intellectual Property. Thirdly, most writers’believe that if IP is linked to firm performance, firms and investors would benefit from this concept. It is also probable that the expected future economic benefit will flow to the entity and the cost of the asset can be reliably measured.These requirements are consistent with international standards, yet the criteria are rarely met by IP and so IP is hardly ever disclosed quantitatively in the accounts
The human capacity for intelligence, creativity, and collaboration produces an abundance of new information, inventions, and artistic creations. As long as these fruits of the mind are afforded legal protection, they constitute intellectual property(Kamil, 2000). In his own contribution, Kubis (2011), states that IP is known in the industrial world as the most valued asset owned by a company because it is generally believed that an investment in knowledge always pays. He goes further to say that as Ben Franklin quoted, “if a man empties his purse into his head, no man can take it away from him” Current development in the global economy have brought the best interest about the ascendency of intellectual property. The brick and mortar economy is being replaced with economy of ideas. In the new global economy, wealth is generated towards harnessing the value of knowledge. The concept of creative enterprise has evolved from ideas, innovations, inventions and knowledge and investors and company/firms are increasingly investing on that. Innovators thus seek property rights that allow them to own their creativity and innovations in the same way that they can own physical property.
Intellectual property is seen as a key concern in the quest for growth, development andcompetitiveness. Advancement in knowledge broadly conceived is a key driver of economicprosperity in the twenty-first century. The ongoing revolution in information and communicationtechnologies (ICT) has dramatically reduced the costs of creating, processing and transmittingknowledge, both nationwide and across borders. The pace of innovation has acceleratedsignificantly. These developments lead to closer international economic integration and morerapid innovation which create new challenges for IP regimes and policymaking.At the same time, both the innovation processes itself, and the production activities of firms are globalizing rapidly. To be competitive in the globalized economy, the United Nations member states (UN) have tomaintain, adapt and create institutional and legal frameworks conducive to the creation ofknowledge and its commercialization (Adewopo, 2000).Certain rights are thus allowed to these properties which are used to control the usage.
Intellectual property rights have a key role to play in thisregard.This raises challenges in terms of managing, protecting and enforcingintellectual property rights across borders. Belle, (2006) observes thatcountries with economies in transition face additional challenges to the challenges experienced by developed countries. They struggle to integrate into theincreasingly global production networks and to find their own niche in the increasingly globalvalue chains. To be successful, they need to assign high priority to developing their owninnovative capacities, as well as their ability to absorb and adapt technological innovations fromabroad, and to move up the value chain over time. Again, Intellectual property regimes have a key role to play in this regard.Like other property, intellectual property may be commercially exploited.
There are laws on intellectual properties but most people do not know about the existence of such laws while those that know about it do not know how to enforce it when violated due to ignorance or so many other factors militating against it.This situation is applicable mainly to developing countries in which Nigeria is one. Large organizations, industries and manufacturing firms are increasingly seeking intellectual property through investments and research and development. Again, this is applicable mainly to developed countries. In the third world countries, most manufacturing firms do not even have a research and development, (R&D), department. Huge amount of money is spent on research and development and these investments are meant for breakthroughs such that protection against competitors and intruders becomes necessary. In the advanced world, companies invest billions annually in research and development also to differentiate themselves from their competitors and ultimately to offer superior products in terms of quality, cost and future superiority. The result of such efforts however include both tangible and intangible asset such as intellectual property. Intellectual property is thus a significant contributor to a firm’s value. Gassman, Zeigler, Ruther, and Bader(2012:18), believe that intangible asset can account for more than 70% of a firm’s value. It is therefore a considerable valuable asset for most companies but managers often do not fully appreciate and extract value from those assets. The problem then lies on how to manage and/or implement a plan to successfully turn this substantial market value into cash to meet needs. Secondly, how does one significantly extract value from it so that it will contribute to a firm’s sustainability, efficiency, and general performance? It is therefore obvious that management of any organization cannot be effectively and efficiently done without protection of these properties. To protect them, intellectual property rights are obtained as tools to use. These rights also act as incentives to invent or innovate, enhancement of technology innovation andas tools for ensuring equitable and fair utilization of genetic resources (Gassman et al.,2012).
The first industrial property protection in Nigeria was in respect of Trademarks. This was with regards to the trade mark proclamation in1900 by which the UK Trade Mark Act wasmade applicable to the then Protectorate of Southern Nigeria. This wasextended to the entire country following the amalgamation of the Southernand Northern Protectorates in 1914 (Wakhungu. Nyukuri, and Sikoyo, 2009)
In respect of patents, in the late 19th and early 20th centuries, patentsregistered in the UK were in Nigeria.The colonial masters first introduced the patent system in the former colonyof Lagos and Southern Nigeria in 1900 by the Patents Ordinance No. 17 of1900 and the Patents Proclamation Ordinance No. 27 of 1900 respectively.The Patents Proclamation Ordinance No. 12 of 1902 introduced similarlegislation in Northern Nigeria. The respective instruments provided for afull-fledged patent office headed by aRegistrar as was provided in the patent acts. However, in Okafor(2012), it is believed thatthe introduction of patent administrative institution was nevermeant to encourage either indigenous inventive activity, local research and development, innovation or to accomplish an effective transfer oftechnology but instead it was geared towards the protection of propertyrights in machinery technology relevant for the exploitation of gold andother mineral and human resources in the colonies thereby enriching their own country.
Following the amalgamation of Southern and Northern Nigeria in 1914, separate legislation for the different regions were repealed andsubstituted by the Patents Ordinance No. 30 of 1916The new law only provided for the registration in Nigeria ofpatents already granted in the UK, an anomaly that persisted even long afterNigeria became independent in 1960. Effectively, Nigerians or otherapplicants had first to apply to the UK patent office to be granted a patentfor an invention before proceeding to Nigeria to have it registered. It alsomeant that it was the UK law that substantively applied to patentapplications and grant in Nigeria up till 1970 (Wutungu, et, al. 2009).In 1970, the Patents and Designs Act No. 60 was enacted.
The Act was modeled on the draft law prepared in 1965 bythe United International Bureau for the Protection of Intellectual Property(BPIP), the precursor of the World Intellectual Property Organization,(WIPO). Beyond just nationalizing the patent application and grant process,there appeared to be no policy rationale or consideration as such behindadopting the model given that there was no national policy with regard to itsindustrial and technological development (WIPO, 2002) However, despite the fact that thecountry had since articulated its industrial and technological developmentpolicy and plan, these have not yet been reflected in the international propertylaws as the 1970Act is still in force.
1.2 Statement of the Problem