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Chapter 7. Managing Intellectual Property > Copying Is Easy—And Harmful!

Copying Is Easy—And Harmful!

Even though the entrepreneurs who found new firms are often very effective at developing new products and services that meet the needs of customers, they are often very ineffective at capturing the financial returns from introducing these products and services. The reason is that it is usually very easy for others—particularly large established firms—to imitate the new products and services that entrepreneurs have developed. One study by Richard Levin and his colleagues showed that approximately half of the time, the average unpatented new product could be duplicated by between six and 10 competitors at less than half the cost of the original development.[1] Another study, this one by Edwin Mansfield, showed that, on average, one third of new products could be imitated in six months or less.[2]

Established companies find it relatively easy to imitate the new products and services introduced by entrepreneurs for a variety of reasons. Many new products can be reverse engineered, with the technical staff of an established company simply taking apart the entrepreneur’s new product and figuring out how it works. Once a company’s engineers figure out how another company’s product or service works, it is often very easy for them to come up with another way to do exactly the same thing.[3]


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