The Strategic Management of Trade Secrets in Technology-based Firms

The importance of trade secrets to the effective strategic management of technology-based firms can make the difference between economic success and failure for significant new product lines, or even the firm itself. This article proposes the conceptual outlines of a framework addressing the strategic management of trade secrets. The author identifies three environments that strongly influence strategy formulation (legal and market) and strategy implementation (organizational). A conceptual framework for trade secret strategy formulation is developed, offering a logical approach to reaching a managerial choice of trade secrecy over other forms of intellectual property protection. Discussion of trade secret strategy implementation invokes an emphasis on managerial control structures and mechanisms, focusing on the use of the trade secret audit, the identification of components of an implementation strategy (e.g., employee education, controlling physical and electronic access, and monitoring competitors), and an ever vigilant defense of trade secret protection pursued in the courts.