Using patent analysis to establish technological position: Two different strategic approaches

Discussions on business strategy formation in the past 50 years can be separated into two categories: the inside-out and the outside-in approach. Technology is a critical factor when manager formulate their business strategy, and patents have served as an important indicator of technology. A patent portfolio can be used to understand the capabilities of a firm, as an inside resource pattern; and the patent citation of firms can be used to find the relationship of a firm, as an outside dependency. This study uses patent information to establish an effective model for the technological position of business methods. The 5 by 6 matrix was generated and four situations between firms were induced. Researchers and managers can use that matrix and situations to recognize the real competitors or cooperators, and formulate the technological strategies which include competition, cooperation, or complementary cooperation.