While the value of patents is documented widely for technology ventures, whether retail ventures can improve their survival odds from patents, copyrights or trademarks remains unexplored. Given the relatively lower survival rate of retail ventures, whether investing in intellectual property could improve their survival odds is an important research question for both the retailing and entrepreneurship literatures. Based on a sample of 585 retail and 2406 non-retail ventures in the Kauffman Firm Survey, retail ventures have a lower chance of survival. Compared to non-retail ventures, patents, trademarks or copyrights in retail ventures increase the odds of survival. The findings have implications for resource allocations related to intellectual property in retail ventures.

Introduction

New retail ventures represent a significant portion of the US economy. Overall retail productivity is driven by “more-efficient firms replacing a set of less-efficient exiting ones” (Hortaçsu and Syverson, 2015, page 93). The US retail sector has vibrant entrepreneurial activity. In 2014, for example, entry and exit rates for new retail establishments with 1–۴ employees were 15.0% and 20.5%, respectively. Despite their contribution to the vitality of the US retail sector, retail ventures face a slightly below average 5-year survival rate of 41.1% compared with an eight industry sector average of 43.9% (Census Bureau 2005 data). While the interest in understanding retail venture failure has increased recently, the question of whether investments in intellectual property by retail ventures improve survival odds remains unexplored. We ask – Does the type of intellectual property protected by a retail venture improve its odds of survival? We draw on a longitudinal sample of 585 retail and 2406 non-retail ventures followed from 2004 to 2011 in the Kauffman Firm Survey, the most comprehensive longitudinal sample of US ventures. To rule out alternative explanations, we control for a variety of factors, including credit risk from archival source, along with state, year, and industry dummies. We find that patents, copyrights, and trademarks improve survival odds of retail ventures. creative process. When the United States government recognizes the ownership of intellectual property, it grants certain rights that will be protected under the nation’s laws. There are three such types of intellectual property protection common among retail firms, which are known as copyrights, trademarks, and patents. We review each type of IP and highlight benefits of each type of IP for retail ventures. Copyrights are a form of intellectual protection provided to authors of original works of authorship fixed in any tangible medium of expression, meaning that the work has been documented or communicated in an observable way, either directly or through a machine or device. In retail industries, copyrights have been issued to protect proprietary retail management software, and virtually all e-commerce retailers’ website designs. Other examples include artistic works, literary works, music, graphic works, and sound recordings. A trademark is a word, name, symbol, device, or any combination, used or intended to be used to identify and distinguish a retailer’s goods and services from those of others, or to indicate the source of those goods and services. Accordingly, trademarks prevent competitors from using confusing images or designs in order to piggyback on a retailer’s hard-won brand identity. In addition to trademarking their business names, retailers also obtain trademark protection for their slogans, theme songs, logos, signature products, and their store and station layouts. The trademarked item must be distinctive and not trademarked by another firm. Trademarks from the United States Patent and Trademark Office (USPTO) expire after 10 years but can be renewed. If a trademark application is approved, the company can add the registered trademark symbol (®) to the company’s mark and is eligible for IP protection.