A System Dynamic Approach for Evaluating the Effects of Patent Risk Management on Company Economic Performance

Abstract

The purpose of this research is to choose the patent risk management strategies, which is a critically important and challenging issue to the company. With the increasing ownerships of patent, the risk occurs frequently and sophistically. It might be difficult to carry on the appropriate countermeasures to organize the effective patent risk management for the company. In this paper, we study the alternative patent risk management strategies affecting on the company’s economic performance. Several impacts of the mainly investments, including the R&D investment, mitigation strategies, and the insurance premium, are measured by the net cash flow. We draw our data from the small-to-medium-sized enterprises in information industry in China. Specifically, a system dynamics simulation model is developed to analyzing the process. The results show that investing in R&D has a higher payoff compared with investing in the mitigation measurements. The insurances reduce the risk of the firms effectively in certain range. In addition, it is demonstrated the policy strengths is not that important as we thought. Our study suggests the importance for firms to account for these actions in overall patent risk management and suggest that the effect of the policy strengths could be ignored.