they sought to minimize loss of technology in the absence of legal protection, particularly trade secrets. One of the more frequent ways in which competitors get their hands on technology is to hire away key employees, a kind of "predatory hiring." To defend against this, businessmen segment their technology, exposing the fewest possible workers to each segment. That, and a number of other techniques, work to a limited degree to prevent technology loss, but those same techniques have a negative effect on efforts to advance technology and have a distressing effect on employee training. Human resource development suffers in silent, unnoticed ways in low-protection intellectual property environments. Most important, as noted, there seems to be a direct connection between low protection and lack of stimulation to perform in-house research.
In the universities, researchers who had come up with important inventions, sometimes to their own surprise, found they had to start their own company to commercialize their invention. When they do this, they are usually ill equipped to function as entrepreneurs, they neglect their students, and worse, they neglect their ongoing research. Some, who have studied abroad, understood that if they could effectively protect their inventions with patents and trade secrets, it would be possible to license the invention to others better prepared to commercialize the new technology. Some of the younger researchers were particularly restless on this point.
Venture capital firms find they cannot obtain useful information about the underlying technology on which start-up firms base their requests for venture capital because the typical start-up company fears losing its technology to the venture capital firm. As a consequence, venture capital firms seldom even reach the question of whether they are willing to invest in such start-up firms. Instead, they invest in firms that are not based on technology or they invest in existing companies with assets and track records.
Research park directors reported that they cannot raise private funds to support their work. This is a serious problem, particularly when government research expenditure diminishes. Moreover, the synergy expected within the parks has not materialized to the extent it does in countries with high-stimulation systems. Both deficiencies are traceable to low-protection environments. Normally, private funds will not be invested in research, other than as an act of charity, if the expected results cannot be appropriated through the application of the tools of intellectual property. Within research parks, investigators who are brought together to stimulate each other's thinking, are instead wary of sharing proprietary technical knowledge for fear it will be misappropriated by others at the center. In countries with adequate protection, this fear is overcome by enforceable confidentiality agreements and other protective mechanisms.
It appears that weak intellectual property protection inflicts very high costs on the development process. These costs are largely in the area of