Lecture 8 Innovation and International Legal Systems

8/13/2019 Lecture 8 Innovation and International Legal Systems

1/26

1

Lecture 8

Innovation and InternationalLegal Systems


2/26


3/26

Innovation Introduction of new things or methods These could be products and/or services

relating to: Associated markets - establishment of

new methods of production, supply anddistribution;

The introduction of changes inmanagement, work organization, andthe working conditions and skills of theworkforce


4/26

Companies manage businessoperations representing differentset of opportunities for innovation,in two specific ways innovation input opportunities distinctive output opportunities

These represent two main forms ofinternationalisation, namely, resource -seeking very often go

market -seeking

Dimensions of innovation


5/26

NIS are characterised by 3 key elements

The quality of local scientific andtechnological institutions Design-related and creative expertise Institutional relationships between

enterprises Universities and government research

organisations Regional variations in these components

partly account for firm-level differencesin innovation-related capabilities andcompetitiveness.

National Innovation Systems


6/26

Entrepreneurship Entrepreneurship and innovation go hand-in-

hand. Entrepreneurs

whether working in small or large firms, as owner-managers or employees, are distinctive

Entrepreneurs have the capability andmotivation to pursue innovative commercialopportunities

Such innovations are riskier and more radical thannormal They identify such opportunities and assemble the

resources and capabilities needed to create value.


7/26

Born Global firms Is a term used to describe a firm that from

its beginnings, immediately or very quicklyreliant on a global presence to survive andsucceed

Born global firms are also referred to asinternational new ventures (INVs) in theinternational entrepreneurship literature.

They can be defined as business

organizations that, from inception , seek toderive significant competitive advantagefrom the use of resources and the sale ofoutputs in multiple countries.


8/26

SMOOTH Reliance on SMOOTH

Source raw materials wherever they are thecheapest

Manufacture anywhere in the world whereit is most cost effective

Obtain and sell in those global marketswhere prices are highest

Organise and raise finances globally Try and forge international strategic

alliances Hire the best talents from all over the

world. To manage all the above points


9/26

Key areas of dispute Debates have developed around the concept and the

empirical reality of the born global firm. The applicable definition of global, specifically is a

firm born global (or global at all) if it simplyexports and imports products and services and

has no FDI Are born global really global in terms of their

cross-border trade and/or FDI, or are theyregional?

How quickly does a small firm needs to develop aglobal presence to be called a born global firm?i.e . what does from inception mean in theabovementioned definition?


10/26

The practical challenges forinternationalising SMEs

SMEs face significant limitations compared tolarge firms, making internationalisationstrategies riskier.

These limitations mean that small firms oftenneed to be that much more entrepreneurialand innovative

And/or take risky short-cuts, to expand acrossnational borders


11/26

How do SME managers knowwhich markets to enter?

Mathews and Zander propose threemilestones of internationalentrepreneurial processes: (1) the discovery of new opportunities (2) the deployment of resources in the

exploitation of these opportunities (3) engagement with competitors


12/26

The International LegalEnvironment


13/26

Types of legal systems Common law Statutory law

Code law Religious law Bureaucratic law.


14/26

Common Law

Legal system in the UK and its formercolonies, including the USA, Canada,Australia, India, New Zealand, andmuch of the Caribbean

Essentially unwritten, based on judicial

precedent There are variations between countries


15/26

Statute Law

The laws passed by government.

There are variations between countries.For example : Freedom of Information Actin UK and USA.


16/26

Code Law

Explicit codification in written terms of what isand what is not permissible.

Such laws can be written down in criminal, civiland/or commercial codes.

This is the world s most common system.

Most continental European countries, togetherwith their former colonies, follow this type oflegal system.


17/26

Religious Law Based on rules related to the faith and practice

of a particular religion - a theocracy recogntionof form of God. For example, Iran where mullahs(holy men) determine what is legal or illegal

depending on their interpretation of the Koran,the holy book of Islam. In countries relying on religious laws there is

often an absence of a due process and appealsprocedure.

Can pose particular problems for businessesoperating in those countries.


18/26

Bureaucratic Law

Occurs in dictatorships and communist countrieswhen bureaucrats largely determine what thelaws are, even if these are contrary to thehistorical laws of the land.

Also causes particular problems: MNEs find itdifficult to manage their affairs as there tends tobe a lack of consistency, predictability and appeals procedures.


19/26

Impact on InternationalBusiness

Foreign ownership restrictions Environmental restrictions Exit restrictions Trade restrictions Example of Trade difference:

The Koran says that people should not charge

others interest as this is an unfair exploitation ofthe poor. Thus banks charge up-front fees, andowners of bank deposits are given shares of thebank s profits rather than interest.


20/26

Settling International BusinessDisputes

Which country s laws apply?

In which country should the issue beresolved?

USEFUL LINK: http://www.bbc.co.uk/news/business-19662880 Japan v China 2 min
http://www.bbc.co.uk/news/business-19662880http://www.bbc.co.uk/news/business-19662880http://www.bbc.co.uk/news/business-19662880http://www.bbc.co.uk/news/business-19662880http://www.bbc.co.uk/news/business-19662880


21/26

Intellectual PropertyRights

1. Patents

2. Trademarks

3. Copyrights

4. TRIPS (Trade Related Intellectual Property Rights)

Developed countries (since 1 Jan 1996) Developing/Transitional countries (since 1 Jan 2000) Least developed countries (from Jan 2006).


22/26

1. Patents

Patent law confers ownership rights on theinventor

.

To qualify as the subject matter of a patent theprocess must be novel, involve an inventive step and

be capable of industrial application.

Inventive seeks to establish that a step has beentaken which would not be obvious to experts in thefield.

Patents depend upon registration for their validity.


23/26

2. Trademarks Trademarks are any sign capable of

being represented graphically which iscapable of distinguishing goods orservices of one undertaking fromthose of other undertakings (UK ,

Trade Marks Act 1994 ).This is sometimes referred to as the productdifferentiation function.


24/26

3. Copyright Copyright law prevents the copying of forms of

work (e.g. an article, book, play, poem, musicscore, etc.) rather than the ideas contained

within these forms. Sometimes the copyright can be extended to

the structure underpinning the form actuallyused (e.g. the plot of a book as well as thebook itself).

Copyright applies automatically and does notrequire registration.


25/26

4. TRIPS The WTO Agreement on Trade-Related Aspects of

Intellectual Property Rights , recognises thatincreasingly the value of goods and servicesentering into international trade resides in the

know-how and creativity incorporated into them. TRIPS provides for minimum international

standards of protection and enforcement of IPR,including geographical indications, industrialdesigns, patents, layout-designs of integratedcircuits and undisclosed information.


26/26

Seminar

Assignment update

Lecture 8 Innovation and International Legal Systems

Documents

Transcript of Lecture 8 Innovation and International Legal Systems