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IPR: Experience With Internal and External R&D

Among Malaysian Chemical and Metallurgical

Manufacturing Companies

HERMAN SHAH ANUAR

1

, ZULKIFLI MOHAMED UDIN

2

, WAN NADZRI OSMAN

3

, KAMARUDDIN

RADZUAN

4

, MOHD NASRUN MOHD NAWI

5

1,3,4,5 Senior Lecturer, Department of Operations Management, School of Technology Management and Logistics, College of

Business, Universiti Utara Malaysia.

2 Associate Professor, School of Technology Management and Logistics, College of Business, Universiti Utara Malaysia.

herman@uum.edu.my, zulkifli@uum.edu.my, wannadzri@uum.edu.my, kamaruddin@uum.edu.my, nasrun@uum.edu.my

Abstract-- The purpose of this article was to highlight the experience of implementation of Intellectual property rights in moderating the relationship of internal and external R&D with the operation performance of the company. The first objective of this paper was to investigate the levels of Operational Performance between Internal R&D, External R&D and IPR among chemical and metallurgical manufacturing companies in Malaysia. The second objective was to investigate whether IPR moderates R&D capabilities towards company’s Operations Performance and the third objective was to compare differences in the levels of Operational performance, Internal R&D, External R&D and IPR based on company status. The population for this study was 599. Only 124 survey responses were usable. It was found that intellectual property rights (patent), signaled the different role played by patent in that relationship. Internal R&D can be successful and have effects towards operational performance. Implementation of external R&D was found able to help companies to run away from dealing with financial constraints which will help to increase company’s operational performance. The IPR moderated relationship between external R&D towards operational performance was exist in the study. This study also indicates that depending types of company’s would apply IPR according to their own expenses and capabilities. A few recommendations were highlighted in order to improve the operational performance of the chemical and metallurgical manufacturing companies. There are still room for improvement that can be useful and being implemented for companies to sustain their business.

Index Term-- Intellectual Property right, internal R&D, external R&D, chemical and metallurgical manufacturing companies.

1.0 INTRODUCTION

Intellectual property rights have become a common phrase among the industrial community (Hall, 1993; Ghosh, 2003; Greenhalgh & Rogers, 2007; Chiesa & Gilardoni, 2004). However, there is great dispute in this sector over whether to apply for protection of novel ideas or inventions using patents, copyright, trademark, trade secret, or any other type of IP protection system (USTR, 2009; Yu, 2010; China Daily, 2007; Larrick, 2008). In this millennium, R&D and IP managers try to cope with better information exchange, shared resources that promotes win-win relationship among the members of the department, fully utilise the usage of technology, efficient

teamwork spirit and effective processes that create value to customers and the organisations which later on could yield IP protection (Singh, 2007). When IP protection is guaranteed, this will contribute to the long lasting funds for another invention which will benefit the organisation, industry, and society as a whole.

As an example in the Ireland, the long lasting funds can be in the form of a proper system. IP Implementation Group played active role when they did an excellent job in inventing a system. This system promotes for an easier and faster for entrepreneurs and companies to negotiate a commercial arrangement with research performing organizations for intellectual property arising from State-funded research (Bruton & Sherlock, 2012).

Apart from that, the new protocol for the management of IP associated with State funded research will help to ensure various levels of enterprises from small businesses to multinationals to get the benefit of the ideas originating from publicly funded research with greater simplicity and certainty. With the help from the IP Protocol, it marks a major evolution of Ireland’s approach to industry engagement with public research (DJEI, 2012).

The idea for the long lasting funding set up by the Ireland government is about encouraging industry for both indigenous and FDI companies. This in the long run creates the atmosphere of making collaboration with Ireland’s universities, institutes of technology and other publicly funded research institutions. With that, it has more access and opportunity to commercialize the IP generated from such research and turns it into products and services for the global marketplace.

2.0 LITERATURE REVIEW

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R&D and IPR among chemical and metallurgical manufacturing companies in Malaysia.

The construct of the study for internal R&D consists of: good R&D strategy, strong financial resources, strong infrastructural support, top management support, top management does not interfere, no delays, R&D management knowledge, analytical techniques, adequate market research, scan existing technology, evaluate technology, integrate technology, leverage productivity, internal R&D prior knowledge, absorb external know-how, increase complexity, increase product lead-time, short term profit, returns to innovation strategy, source for internal R&D, and target for long term profit.

The construct of the study for external R&D consists of: does not have better technology capability, do not know how to reduce labour cost, insufficient government incentives, not enough requisite expertise, patent easy to apply, not enough improvement in R&D, government incentives, government regulations, not enough R&D personnel, not enough infrastructural support, intellectual property rights guaranteed, no licensing agreement, not enough R&D contracts, outsource activities, customer-supplier relationships, strategic alliance, organizational modules, good consultancy, and technology advances.

The second objective of the study was to investigate whether IPR moderates R&D capabilities towards company’s Operations Performance. The construct of the study consists of scope patentability, inventor-ship rule, adequate description, patent infringement, risk of technology, patent awareness, impact of blocking patents, scope of the exemption, patentability of new inventions, apply novelty requirements, utility requirements, non-obvious requirement, and wide breadth of patent claims.

The third objective of the study was to compare differences in the levels of Operational performance, Internal R&D, External R&D and IPR based on company status. This question is to investigate whether any differences occur among three types of company status which were locally owned company, foreign invested company or joint-venture type of company. When the comparison being made, it gives information on how the differences can be utilized for the advantages of the local companies.

The outcome from H1 was supported by system theory when internal R&D (H1A), external R&D (H1B) and IPR (H1C) had a positive relationship towards Operational Performance. This discovery was in accordance with system theory. The production process is an input-output system (Wiendahl & Springer, 1988). Since the internal R&D, external R&D and IPR (patent) were the inputs from the production it will lead to a finished product after undergoing the long manufacturing process. There is an argument when IPR (patent) is not tangible asset but, it is also a form of a product in the form of

intangible assets (Weinstein & Huang, 2010). Therefore, H1 were supported by system theory.

H2A hypothesized that Internal R&D has a significant positive impact on Operational Performance moderated by IPR (Patent) was supported in this study. This is also in line with H2B that hypothesized External R&D has a significant positive impact on Operational Performance moderated by IPR (Patent) that were also supported. H2 was supported by Invention-inducement theory when it highlighted that patents motivate useful invention. Incentive for invention will become less rewarding without patent system which reflects the public interest.

As mentioned by Gilbert and Shapiro (2007), compromise between the amounts of invention were induced by better patent strength and cost increment to the society very much related to monopoly by patent holder. This also were supported by McFetridge and Rafiquzzaman (1986) who mentioned that stronger patent should be placed to product that produce more valuable inventions. In another point of view, a patent serves it function as advertises the presence of an invention and facilitates licensing as mentioned in the Disclosure Theory. Therefore, in this study, H2A and H2B were supported by Invention-inducement Theory and Disclosure Theory.

The third hypothesis in this study try to investigate how do company status differs each other in terms of internal R&D, external R&D, Operational performance and IPR (Patent). The results obtained indicates that there were mixed results for the approaches between internal R&D, external R&D, Operational performance and IPR (Patent) based on their company preferences. There were significant difference between local company, foreign company and joint-venture Company towards Internal R&D (H3A) and external R&D (H3B). Whereas, there were no significant difference between local companies, foreign company and joint-venture Company towards Operational performance (H3C) and IPR (patent) (H3D).

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Invention Inducement Theory highlights that patent would be able to motivate useful invention. It is found that inefficiency of invention was induced by strong patents as an outcome from a compromise between benefits and costs of stronger patent protection. In this study, it was found that patent stimulates and has a relationship with R&D capabilities and operational performance. Disclosure theory, on the other hand, stressed that patents could play its roles to serve as an advertisement for the presence of an invention and thereby facilitate its licensing. In the long run, it will enable the invention to be used more widely than in the case when there is no patent. Development and commercialization theory mentioned that when patenting starts at the very beginning, it gives advantage for the technological development to become a success. Therefore, the economic rewards can be done accordingly (Nelson & Mazzoleni, 1998).

The same scenario applies in the present research where it was found that when patenting occurs, it drives stronger relationship between R&D capabilities and operational performance of a company. A prospect development theory proposed that the utility of a patent comes after an initial invention is made (Duffy, 2003). When a company has a broad patent on an initial invention, it will enable the patent holder to arrange development of a technological prospect in various dimensions. Finally, system theory supports the argument that the output of the company is not only the product but also the profit received, internal and external satisfaction, or interested parties (Weindahl & Springer, 1988).

As the profit of a company is synonymously related to the profit received, internal and external satisfaction, or interested parties, intellectual property rights in the form of a patent may also yield unexpected amounts of return. This also goes in-line with the unintended or unwanted output as well. Therefore, IP rights can no longer be sidelined because the current economic situation regards it as one of the outstanding elements to be considered in the modern business arena (Birkinshaw & Fey, 2001).

The construction of the instrument were derived from intensive literature reviews which includes Internal R&D (Cassiman & Veugelers, 2002; Veugelers, 1997; Cohen & Levinthal, 1989; Teese, 1986; Galia & Legros, 2004; Bayona, Marco & Huerta, 2001; MASTIC, 1998; Ramanathan, 2008; Bercovitz, & Feldman, 2005; Cassiman, 2005; Gima & Patterson, 1993; Green, Stark, & Thomas, 1996), External R&D (MASTIC, 1998; Fukugawa, 2009; Narula & Hagedoorn, 2000), Operational performance (Gunasekaran et. Al. 2001, 2004; Gupta & Somers, 1996; Voss, 1995), and Intellectual property rights- patent (Taylor & Cayford, 2002).The instrument development also took into consideration the aforementioned theories. The instrument was in the form of survey questionnaires. The content validity was conducted by distributing the questionnaires to selected academicians and practitioners in order to obtain their expert opinions and relevancy of the questions to support the

implementation of patent in their respective manufacturing companies.

3.0 METHODOLOGY

The method of data collection was through survey method. The survey questions were distributed to the respective chemical and metallurgy manufacturing companies all over Malaysia. The names of the companies were obtained from Intellectual Property Corporations of Malaysia (MyIPO). These companies at the same time also registered with the Federation of Malaysian Manufacturers (FMM). Unit analysis for this study was companies with key R&D/ IP managers or executives, or any executive level officer who knows about the company’s R&D / IP department.

For the survey items, it was divided into five sections, namely: section A (demography), section B (internal R&D), section C (external R&D), section D (IPR-patent), and section E (operational performance). The number of items for each section were, section A (10 items), section B (22 items), section C (20 items), section D (14 items), and section E (11 items).

Factor analysis was then conducted in order to identify, reduce, and reorganise the overall survey items into certain constructs under variables used in the study. Factor analysis for dimension independent variable 1 (Internal R&D), the items were reduced from 22 items becoming 18 items, independent variable 2- external R&D (20 items becomes 16 items), while the other dimension remains the same without any reduction. The total number of items fit to be analyzed were 59 items with 10 items from demography section.

The population for this study was 599. Using the confidence level of 95%, confidence interval of 8, sample size needed is 120 (Survey system, 2012). After the surveying question collection was finished, a researcher received 138 responses. Out of this number, only 124 survey responses were usable. The other 14 survey responses were unusable due to missing and incomplete data in their survey responses.

In this study, company operational performance is going to be measured in terms of quality, cost, flexibility, delivery, and innovation for customers. Details of the investigation will be on the moderating variable known as intellectual property rights which focuses on patent in the relationship between R&D capabilities and operational performance of a company. Once the R&D and IP managers understand their company strategies, reorganise their strategies to meet customer needs, engineer relevant processes, define the appropriate focus and relationship, the intellectual property right concept would be beneficial to the company’s business strategy.

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foreign owned companies, locally owned companies, and joint-venture companies put more emphasis on Internal R&D. They agreed that by implementing internal R&D, it will contribute to better operational performance of the company. This was supported by Nakamura and Odagiri (2005), Audretsch, Menkveld, & Thurik, (1996), and Bonte (2003) whom mentioned that when employing important resources, such as researchers, research materials and equipment, it helps to improve company operational performance.

In the case of the post-hoc analysis to evaluate how the levels of external R&D towards a foreign owned company, locally owned company, and joint-venture companies; it was found that there was a significant difference between these three types of company (H3B was supported). This was supported by Nakamura and Odagiri (1992); Cassiman and Veugelers (2006); and Rigby and Zook (2002). This indicates that these companies put serious attention on acquiring external R&D on their business approach as compared to the joint-venture companies.

With respect to the post-hoc analysis for evaluating the levels of company status towards operational performance; it was found that there was no significant difference between these three types of company. It rejects the hypotheses (H3C was rejected). This was commented by Wu (2008) by saying the cause for the problem to exist due to culture differences, government limitations and human resource management problems. This was also related to the shortness of talent when

situations such as unpractical education system and embarrassing output of university graduates; different recruitment and selection system between foreign companies, local companies and joint-venture companies; un-perfect salary incentives; and high expatriate failure rate. When the post-hoc analysis done to evaluate the levels of company status foreign owned company, locally owned company, and joint-venture companies towards Moderating Variable-IPR (Patent); it was found that there was no significant difference between these three types of company (H3D was rejected).

4.0 RESEARCH FINDINGS

The summary of the hypothesis testing can be found in Table 5.1. The discussion of this chapter will be based on these findings. This research represents an effort to understand the integrated relationship between R&D capabilities towards operational performance moderated by intellectual property rights (patent) from the perspective of Malaysian chemical and metallurgical industries. The findings successfully answered the research objectives, namely: 1) To study the relationship between the levels of Operational Performance between Internal R&D, External R&D and IPR, 2) To investigate whether IPR moderates R&D capabilities towards company’s Operations Performance, and 3) To compare differences in the levels of Operational Performance, Internal R&D, External R&D and IPR based on company status.

Table 5.1

Summary of the Research Findings

Research Questions Research Objectives Hypotheses Remarks

1. What are the

levels of Operational Performance between Internal R&D, External R&D and IPR?

To study the relationship between the levels of Operational Performance between Internal R&D, External R&D and IPR?

OP has a positive relationship with: H1A: IRD H1B: ERD H1C: IPR

H1A: supported H1B: supported H1C: supported

2. Do IPR

moderates R&D

capabilities towards company’s Operations Performance?

To investigate whether IPR moderates R&D capabilities towards company’s Operations Performance.

IPR moderates

relationship of: H2A: IRD H2B: ERD

towards company’s

Operations Performance.

H2A: supported H2B: supported

3. Are there

differences in the levels

of Operational

performance, Internal R&D, External R&D and IPR based on company status?

To compare differences

in the levels of

Operational performance, Internal R&D, External R&D and IPR based on company status

There was a difference between:

H3A:IRD H3B:ERD H3C:OP H3D:IPR

based on company status.

H3A: supported H3B: supported H3C: rejected H3D: rejected

4.1 RELATIONSHIP BETWEEN THE LEVELS OF OPERATIONAL PERFORMANCE BETWEEN INTERNAL R&D, EXTERNAL R&D AND IPR

This research provided empirical evidences that internal R&D was positively related to a company’s operational performance. In addressing the first issue related to this study, the conflicting findings in the literature about the relationship between internal R&D and operational performance were investigated.

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Internal R&D has a direct relationship with operational performance as mentioned by Cassiman and Veugelers (2000), when they said several dimensions may contribute to its full function. It was found in a study at the Swedish manufacturing firms that a relationship between internal and external R&D exists, especially involving industries with high R&D intensities (Bergman, 2010). It was suggested that the employees’ level of education is important for the company’s capability to absorb external R&D. Internal R&D was found to be significant when it does not include interactions between internal and external R&D.

In another study of German firms, it was indicated that internal R&D was significant in all estimations (Schmiedeberg, 2008). The estimation included: the probability of patenting and share of sales of new products. Internal R&D was found to be positive and to have significant effect in all estimations, except the probability of process innovation in high technology industries (Santamaria, Nieto, & Barge-Gil, 2009). Internal R&D was also important for the production of patents in high technology industries.

In Dutch manufacturing firms, internal R&D was reported to be significant and positive in all specifications. Research on these firms showed signs of decreasing returns to scale (Lokshin, Belderbos, & Carree, 2008). A dynamic panel data model applied that allowed for decreasing or increasing returns to scale in internal and external R&D and for economies of scope. When squared R&D variables were not included, complementarity between the two was not supported. If they are included, then the interaction of internal and external R&D became positively significant and with a rather large estimated impact.

There exists relationship between external R&D and operational performance, and this supports the hypothesis (H1B). This is agreed by Nakamura and Odagiri (1992) when they mentioned that that external R&D would produce more benefits without paying spill-over effects which later on improving the company’s operational performance. It was also supported by Rigby and Zook (2002) who agreed that by implementing external R&D, it has the tendency to reduce the cost, improve the quality and faster the speed of innovation, in the long run will improve company’s operational performance. Cassiman and Veugelers (2006) also agreed that implementation of external R&D able to help companies to run away from dealing with financial constraints which will help to increase company’s operational performance.

It was found from this study that there was a relationship between IPR (patent) and operational performance, and this supported the hypothesis (H1C). Argument by Andersen and Konzelman (2005) which highlights that the sustainable industry can be allowed to grow and mature due to incentives to invest an invention and innovation where the implementation of IPR (patent) significantly affect company’s operating performance. Encaoua, Guellec, & Martínez, (2006)

also support this argument by saying that implementing these policies (IPR-patent) promotes better economic development, operational performance and growth. In addition, more supports of the use of IPR can help to increase incentives to innovate and stimulates introduction of new technologies (Helpman, 1993; Bessen & Maskin, 2000). Haned (2009), outcome from her study with manufacturing firms in France indicates that companies registering higher sales rates deposit more IP asset than those having a lower growth rates.

4.2 INTELLECTUAL PROPERTY RIGHTS MODERATES THE RELATIONSHIP BETWEEN

INTERNAL AND EXTERNAL R&D TOWARDS OPERATIONAL PERFORMANCE

Intellectual property rights moderates relationship between Internal Research & Development (IRD) towards operational performance. Therefore, the hypothesis was supported (H2A). Also, it is in accordance with the results obtained by Czarnitzki, Hussinger, and Schneider (2011) that states that the function of the intellectual property rights system was needed for successful utilization of this intellectual property right policy. It supports the common theme whereby the impact of the uncertainty on IPR exists for companies R&D collaboration. Park (2002) agreed that with the proper IPR (patent) helps to increase technical efficiency of production and R&D accumulation which later on will improve company’s operational performance.

The IPR moderated relationship between external R&D towards operational performance was exist in the study (H2B was supported). This finding was supported by Chesbrough (2003) and UNCTAD (2005) that proposed external R&D would improve confidence and sources of knowledge in innovation that could yield better company’s operational performance. This is also in line with findings that R&D outsourcing with involvement from strategic research projects was needed for standard R&D tasks. In the long run, it will improve company’s operational performance (Pisano, 1990; Bonte, 2003; Chesbrough, 2003). When IPR moderates the relationship between external R&D and operational performance, it will facilitate R&D contracting and segmentation of R&D activities for the betterment of the company in the future (Grandstrand et al., 1992; Narula, 2001). This is further strengthening the study findings when the perspective of the manufacturing industries in Canada, there was a strong causal relationship exists between innovation and patents (Baldwin & Lin, 2002).

4.3 DIFFERENCES IN THE LEVELS OF OPERATIONAL PERFORMANCE, INTERNAL R&D,

EXTERNAL R&D AND IPR BASED ON COMPANY STATUS

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companies differ in a way they implement their internal R&D approach. Cassiman and Veugelers (2005) agreed that integration of internal and external R&D has a positive effect for innovation activity of a firm in order to increase marginal return in the long run. Helble and Chong (2004) findings indicate that R&D managers need to increase and/or maintain the strategic importance of their R&D site internally within their global corporate R&D organisation. In line with this approach, Zekiri and Angelova (2011) supported this hypothesis when commented that Internal R&D forces are controllable forces upon which the management administers to adapt to changes.

Results obtained from the one way ANOVA test table on Independent Variable 2- External R&D, indicated that there was a significant difference between a locally owned company, foreign owned company and joint-venture company in the way they implement their External R&D. So, H3B was supported. This is argued by Birkinshaw and Fey (2001) which stated that there was a negative relationship between External R&D and company performance.

Their findings stated that for the high performing R&D companies, they opt to choose using less external contracting, while those that are struggling outsource more. Where in this case, smaller size companies applied more usage of External R&D. In another scenario, Cassiman and Veugelers (2005) suggested that Internal R&D and External R&D are complementary to innovation activities, but that the degree of complementarity is sensitive to other elements of the firm’s strategic environment. In addition, findings from Helble and Chong (2004) supported the importance for the company’s internal R&D being corporated with their global corporate organisation (external R&D).

As for the one way ANOVA test table of Dependent Variable – Operational performance, it shows no significant differences between locally owned company, foreign owned company and joint-venture company in the way they implement their Operational performance. So, H3C was rejected. This hypothesis were agreed by Da Silviera and Cagliano, (2006) where they mentioned that elements of operational performance such as cost, quality, delivery and flexibility appears to be more associated with priorities of the company’s business dynamism.

Results obtained from the one way ANOVA test table on Moderating Variable-IPR (Patent), it specifies that the analysis produced no significant differences between locally owned company, foreign owned company and joint-venture company. Therefore, H3D was rejected. It was mentioned by Yang and Maskus (1999) that intellectual property rights protection was part of company’s innovation activity which implemented based on consumer assessment. Almeida and Teixera (2008) indicated that depending on type of company, their implementation of the patent was merely based on their forecast of the patent that they applied for. If the patent still is

considered as patent undergrowth, the company needs to bear the additional cost for it. That is the reason why different company has different strategy towards patenting activity. Greenhalgh and Rogers (2007) agreed that IPR being used as a tool to ensure adequate returns to innovation and creative activities of a company. This specifies that depending types of company’s would apply IPR according to their own expenses and capabilities.

5.0 CONTRIBUTIONS

5.1 ACADEMIC CONTRIBUTIONS

Although there have been previous works on the Research & Development (R&D) capabilities, operational performance and intellectual property rights to develop the scales and a relationship of certain operation dimensions, the current research has developed a novel and comprehensive measurement model for R&D capabilities, operational performance and intellectual property rights.

The empirical findings by validating the variables simultaneously has culminated in a comprehensive framework from the conceptual models into a managerial framework of operational performance surrounding internal R&D, external R&D and intellectual property rights (patent) being flexible to meet customer and business requirements. When a product gets the protection of Intellectual property rights, it gets value addition. At the same time, IP protection will also be able to improve its marketability. The positive result of the relationship of external R&D towards operational performance, which was moderated by intellectual property rights (patent), signaled the different role played by patent in that relationship. There must be some mechanism that could yield better performance from patent towards that relationship.

Second, from the survey, the finding has strengthened empirical evidences for the research framework and supported the hypothesis conceptual models. As the empirical evidence was acquired from chemical and metallurgy manufacturing industries in Malaysia, this model can be replicated and tested on other discrete manufacturing sectors such as in the electric and electronic, food beverages, pharmaceuticals, automotive, wood-furniture, apparel industry or any other industry. This created the groundwork for future researchers to use it as a foundation and gain deeper insights for study into intellectual property rights.

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Fourth, the findings from the post hoc analysis between the levels of internal R&D, external R&D, operational performance, and IPR (patent), it discovered mixed results. The local and foreign owned companies, were influenced significantly to implement internal and external R&D in their business approach. Whereas when in comes to the levels of their operational performance, and IPR (patent), the three different companies differs significantly with each other. This indicates that each types of company were calculative enough in making sure that their investment in IPR will yield good returns in the future.

For the implementation of intellectual property rights and approach on operational performance, local, foreign, and joint-venture company, it was not being influence significantly. Therefore, it can be concluded that these three categories of companies put strong emphasis on the traditional approach of doing R&D where their focus is more towards internal and external R&D rather than implementing protection of intellectual property rights. At the same time, these three companies approach towards delivering their operational performance also differs with each other.

One key contribution from this research is the combined dimensions of the two R&D capabilities, namely internal R&D and external R&D that offer a new perspective to the field of R&D management. Future researchers in R&D management can leverage these measurement tools for strategic management or R&D management studies, complementing the earlier problem statement on the Malaysia intellectual property rights dilemma.

5.2 INDUSTRIAL CONTRIBUTIONS

Firstly, the research profile provided evidences that organizations have begun to invest in intellectual property rights as a means for competitive advantage and value creation. Based on the survey responses, approximately 90% of the responding organizations have shown commitment to implement the protection of intellectual property rights.

Most of the organizations have shown interest in improving their R&D capabilities in order to create value to achieve customer responsiveness and tangible business gains. The findings provided insight into organizations, especially in the chemical and metallurgical manufacturing industries, and assured the industry practitioners that increasing R&D capabilities in their operations has a positive impact to their companies’ operating performance.

Secondly, the findings demonstrated to industry practitioners on the operational practices that they needed to focus on intellectual property rights protection. Although there are organizations that realized the importance of intellectual property rights protection, often these organizations do not know exactly what to implement due to lack of comprehensive understanding of the benefits from intellectual property rights protection.

By proposing, developing, and testing the multi-dimensional research framework, and demonstrating the positive impact to organizations, R&D and IP managers will have a managerial tool to evaluate their R&D capabilities practices. This empirically tested framework can be used as managerial guidance for creating value to the organization in order to reap tangible benefits from businesses and being responsive to customers.

6.0 LIMITATIONS OF THE STUDY

This research is limited to the perspective of internal and external R&D under the umbrella of R&D capabilities. There are other elements of R&D capabilities, such as: R&D planning, coordination between internal and external activities, and IPR management. Therefore, the room for further research is widely open to another researcher.

The scope of respondents was only the Malaysian chemical and metallurgy manufacturers, whereas the other type of manufacturers such as electrical and electronics, automotive, food and beverages etc. were not included. The idea of this study may well become a preliminary idea on how the implementation of R&D capabilities towards the operational performance of a company but it is still cannot be generalized to the whole population of chemical and metallurgical manufacturing industry in Malaysia.

Overall, this research has contributed much to both theoretical and empirical evidences but it is not without limitations. Somehow, the relatively low response rate happened due to the lack of interest from the respondents to participate in the study. During the process of collecting data, the whole nation was in the mood of preparing for the celebrations of Chinese New Year. This might have affected the entire manufacturing sector. Targeted respondents could have prioritized the celebration rather than answering the survey questionnaire even though follow up through phone calls were also undertaken.

By using the limited data, this research could not hold for any additional hypothesis testing. The same sample size of pilot test has been used to purify, validate measurement models and hypothesis testing. Nevertheless, this approach is consistent with what other researchers had done under limited data situation (Swafford, Ghosh, & Murthy, 2006; Narasimhan & Das, 1999; Quah, 2009).

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reduced cost, highest delivery and possibly the highest flexibility. Furthermore, this research detected a lack of participation from top level management executives who think that delegating their responses to other functional managers is more appropriate for them.

7.0 RECOMMENDATIONS FOR FUTURE WORK In general, it is highly recommended that the future work should include all five elements of R&D capabilities. The same condition is also suggested for the geographic scope chosen for the potential respondent. The future research may well use the wide pool of respondents that varies due to diversified manufacturers in order to gain generalization. The different scope of the industry may also become the sample.

Based on the findings and limitations of the study, the following are provided as recommendations for future researches. First, in order to improve the response rate, the sampling frame should combine the Federation of Malaysia Manufacturers Directory (FMM) and the Intellectual Property Corporation of Malaysia (MyIPO), Penang Development Centre Directory and other manufacturer association. In Malaysian research settings, it is recommended not to plan the survey timeline in the month of January to April, as industry practitioners could be busy with their year-start planning schedules. Furthermore, these first four months of the year are full of festivals such as Chinese New Year.

Second, it is best to suggest the future researcher to use multiple methods of obtaining data. They can seek multiple respondents from the participating organizations in order to enhance the reliability of research findings.

Third, with this empirically verified model in the chemical and metallurgical manufacturing industry, future researches should have the confidence to extend their research on other sectors such as automotive, food and beverages, electrical and electronics, apparel design or any other manufacturing sector.

Fourth, future research settings can be established across countries in South Asia or even with countries in other regions. This will add knowledge across nations in the field of intellectual property rights business in the academia.

Fifth, based on the revised model and also dimension level analysis, future research can reform the relationship between internal R&D, external R&D, operational performance and intellectual property rights as a new managerial framework.

Future research opportunities exist in identification and validation the mechanics in detail on each of the R&D capabilities and operational performance dimensions in managing the issues pertaining to R&D capabilities, operational performance, and other elements of intellectual property rights protection. It is hoped that these findings on the R&D capabilities, operational performance and intellectual property rights (patent) will help local organisations to

continuously invest or reengineer key strategies with MyIPO, operations department, R&D department and customers.

Hence, this research has provided answers to the research objectives and added to the body knowledge in the field of R&D and IPR (patent). In the case of protection of IP, the main issue addressed here is about the real pirates who imitate a company’s new invention, product, or processes. The real pirates have been identified as those who manipulate the IPR system of encouraging innovation from the public. In simple words, the common argument is that IPRs now are becoming more important as innovation becomes a primary competitive advantage in the global economy (Hargreaves, 2011).

Finally, it is ideal to complement cross sectional surveys with longitudinal studies in order to gain knowledge of the intellectual property rights implementation. Future researchers can narrow the focus on one or two R&D capabilities variables and follow through with longitudinal researches across different tiers of operational performance that encompass manufacturers to retailers or wholesalers. This way, knowledge of comprehensive intellectual property rights and R&D capabilities can be acquired.

8.0 ACKNOWLEDGEMENTS

The author would like to extend his appreciation to the Ministry of Education, Malaysia for the generous funding to this research effort. Heartiest appreciation goes to the Malaysian Intellectual Property Organization (MyIPO) especially for the continuous support in making smooth of this research along the way. A special thanks to the Federation of

Malaysian Manufacturers (FMM) whose member’s

willingness in participating in this research. A token of appreciation also to the academics and support staff of School Technology Management and Logistics (STML), Universiti Utara Malaysia in providing their supports and assistance in making this research a successful one. To those who involved directly and indirectly while this research is being carried out, thank you very much. This research effort will not be completed without your continuous help, assistance and perseverance.

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