Financial Payoff in Patent Alliance: Evolutionary Dynamic Modeling

Originating from the strategic management theory, resource-based view of firm believes that firms rely on bundles of resources which enable them to gain competitive advantage. Patent, as an integral part of intellectual capital, is an important resource for organizations building capabilities. With the heterogeneous in nature and imperfectly mobile, patent and its management becomes increasingly crucial for organizations facing globalization, information transparency, and intensified competition in developing a sustainable competitive advantage. Drawing upon the literature on strategic alliance, resource-based view, and patent management, we study how sharing patents can create sharing value added and synergy value added that enable participants in the patent alliance to obtain better financial payoff. Specifically, in this paper, we use the evolutionary stable strategy and replicator dynamic from evolutionary game theory to model the synergy effects in patent alliance. Our evolutionary dynamic modeling shows that an evolutionary stable state converges when organizations share patents, and supports that both patent sharing value added and synergy value added from patent alliance would be financially beneficial to organizations.