Entrepreneurship in Technology for ASEAN 1st

Edition Purnendu Mandal pdf download

https://textbookfull.com/product/entrepreneurship-in-technology-for-asean-1st-edition-purnendu-
mandal/

★★★★★ 4.9/5.0 (28 reviews) ✓ 107 downloads ■ TOP RATED

"Amazing book, clear text and perfect formatting!" - John R.

DOWNLOAD EBOOK
 Entrepreneurship in Technology for ASEAN 1st Edition
Purnendu Mandal pdf download

TEXTBOOK EBOOK TEXTBOOK FULL

Available Formats

■ PDF eBook Study Guide TextBook

EXCLUSIVE 2025 EDUCATIONAL COLLECTION - LIMITED TIME

INSTANT DOWNLOAD VIEW LIBRARY

Collection Highlights

Development of Tourism and the Hospitality Industry in

Southeast Asia 1st Edition Purnendu Mandal

Contemporary Advances in Innovative and Applicable

Information Technology Proceedings of ICCAIAIT 2018
Jyotsna Kumar Mandal

The Mind of an Engineer 1st Edition Purnendu Ghosh

Charting the Sustainable Future of ASEAN in Science and

Technology Proceedings from the 3rd International
Conference on the Future of ASEAN ICoFA 2019 Volume 2
Nurul Zawani Alias
Statistical Approaches for Landslide Susceptibility
Assessment and Prediction Sujit Mandal

Renewable Energy Consumption Scenario in Nepal First

Edition Jitendra Mandal

Complexity in Entrepreneurship Innovation and Technology

Research Applications of Emergent and Neglected Methods
1st Edition Elisabeth S.C. Berger

ASEAN Economic Community: A Model for Asia-wide Regional

Integration? 1st Edition Bruno Jetin

Invest in ASEAN Countries Analysis and Treaties Lorenzo

Riccardi
Managing the Asian Century

Purnendu Mandal
John Vong Editors

Entrepreneurship
in Technology for
ASEAN
Managing the Asian Century

Series editor
Purnendu Mandal, College of Business, Lamar University, Beaumont, TX, USA
Managing the Asian Century provides a platform for scholastic discussions and
stresses the need for a holistic framework to understand Asia as an emerging
economic global powerhouse. Books published in this series cover Asia-centric
topics in economics, production, marketing, finance, entrepreneurship, education,
culture, technology, as well as other areas of importance to Asian economics. The
series will publish edited volumes based on papers submitted to international and
regional conferences that focus on specific Asia-Pacific themes, such as investment
in education, women’s rights, entrepreneurship, climate change, wage inequality,
challenges in governance, and corruption. Books in this series are of keen interest to
researchers and policy planners around the world and will be used by universities
for graduate and doctoral level studies.

More information about this series at http://www.springer.com/series/13579

Purnendu Mandal John Vong
•

Editors

Entrepreneurship
in Technology for ASEAN

123
Editors
Purnendu Mandal John Vong
College of Business Lee Kuan Yew School of Public Policy
Lamar University National University of Singapore
Beaumont, TX Singapore
USA Singapore

ISSN 2364-5857 ISSN 2364-5865 (electronic)

Managing the Asian Century
ISBN 978-981-10-2280-7 ISBN 978-981-10-2281-4 (eBook)
DOI 10.1007/978-981-10-2281-4
Library of Congress Control Number: 2016949608

© Springer Science+Business Media Singapore 2017

This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part
of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations,
recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission
or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar
methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are exempt from
the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this
book are believed to be true and accurate at the date of publication. Neither the publisher nor the
authors or the editors give a warranty, express or implied, with respect to the material contained herein or
for any errors or omissions that may have been made.

Printed on acid-free paper

This Springer imprint is published by Springer Nature

The registered company is Springer Nature Singapore Pte Ltd.
The registered company address is: 152 Beach Road, #22-06/08 Gateway East, Singapore 189721, Singapore
Preface

The word entrepreneurship brings forth thoughts and images that are associated
with resources, risk taking, opportunity seeking, monetizing of ideas, and seed
capital. The enterprises are far-reaching and wide-ranging. The entrepreneurs could
well pitch their products and services, to and in, the industries and markets such as
finance, education, manufacturing, healthcare and hospitality, mining, and the
public sector.
Technology conjures ideas on thoughts and thinking towards automation,
mechanization, computerization, convergence of hardware and software, noble
technology, connectivity, and a borderless world. Indeed the onslaught of tech-
nology in the last three decades has been rapid and it has made significant changes
that impacted our lives, living and livelihoods across the globe.
Combining the words of entrepreneurship and technology burst forth Microsoft
and Bill Gates, Facebook and Mark Zuckerberg, Apple and the late Steve Jobs,
Alibaba and Jack Ma, Dell and Michael Dell, Google and Sergey Brin, and Yahoo
and Jerry Yang, and many more can be included in the list. There is a common
theme in these individuals and their global brands. They have novel ideas. They are
entrepreneurs who are able to marshal the resources and add deep technology
research and development to conjure products and services that surround their ideas
to reach the core of consumer markets. Through that process, they also achieved the
monetization of both technology and ideas.
This book expounds technology research and development that fuels
entrepreneurship in ASEAN. It extrapolates technological approaches to big data
analysis, healthcare, trends in intellectual property, port management, manufactur-
ing, land administration, and the influence of Confucianism on entrepreneurship. In
short, there will be interesting essays on the combined force of technological ideas
and ideological forces that is driving entrepreneurship in ASEAN and a wider Asia
today.

Beaumont, USA Purnendu Mandal

Singapore, Singapore John Vong

v
Contents

Modern Approaches of Financial Data Analysis

for ASEAN Entrepreneurs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Insu Song, Bryan Anselme, Purnendu Mandal and John Vong
Business Models for Entrepreneurs: Commercializing,
Leveraging, and Monetizing Intellectual Property Rights
in India and ASEAN Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
K.V. Nithyananda
New Patent Market Analysis Technology for ASEAN
Entrepreneurs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Priyanka Rana, Insu Song, Purnendu Mandal and John Vong
Factors Influencing Implementation of Lean Manufacturing:
Case on Manufacturing in Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Hendro Lukman and Susanto Salim
Global Health Surveillance Approaches: New Opportunities . . . . . . . . . . 59
Insu Song, Dominic Hayes, Purnendu Mandal and John Vong
An Integrated Approach for Healthcare Systems Management
in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Pradip Kumar Ray
An Overview of Impact of Healthcare Inventory Management
Systems on Entrepreneurship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Esha Saha and Pradip Kumar Ray
Gender Equality in Performance Assessment to Nurture
the ASEAN Entrepreneurial Spirit—An Exploratory Study
in Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Philip Michael Ross Smith, Helga Nagy, Christine Bilsland
and Dinh Thi Hong Nhung

vii
viii Contents

Software Development Productivity in Different Sourcing

Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Niharika Dayyala, Kallol Bagchi and Purnendu Mandal
Advancements in Technology and Potential Impacts on Port
Automations Decisions: The Case of Port of Singapore . . . . . . . . . . . . . . 127
Kelly Weeks, Purnendu Mandal and Kabir Sen
Impacts of Land Dereliction: Classification and Basic Information
for Entrepreneurs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Bela Das
Confucianism and Entrepreneurship in ASEAN Context . . . . . . . . . . . . 161
Larry Allen
Modern Approaches of Financial Data
Analysis for ASEAN Entrepreneurs

Insu Song, Bryan Anselme, Purnendu Mandal and John Vong

Abstract Short- and medium-term predictions of stock prices have been important
problems in financial analysis. In the past, various different approaches have been
used including statistical analysis, fundamental analysis, and more recently
advanced approaches that use machine learning and data mining techniques.
However, most of existing algorithms do not incorporate all available information
of the market. Using more informative and relevant data, prediction results will
better reflect market reality. This would benefit in reducing the inaccuracy of
predicting due to randomness in stock prices, using trend rather than a single stock
price variation. For instance, some stock prices are correlated and/or dependent
with/on each other and market mood. In this paper, we review the existing tech-
niques of stock prices and time series predictions, and the classification and clus-
tering methods. Based on the literature analysis, we propose a method for
incorporating-related stock trend information: clustering-related companies using
machine learning approaches. We report on a preliminary analysis results using
monthly adjusted closing prices of 100 companies collected over a 15-month
period.

I. Song (&)
School of Business/IT, James Cook University, Singapore, Singapore
e-mail: [email protected]
B. Anselme
School of Business/IT, James Cook University, Singapore, Singapore
e-mail: [email protected]
B. Anselme
Ecole Nationale Superieur de l’Informatique pour l’ Industrie et l’Entreprise (ENSIIE),
Évry, France
P. Mandal
College of Business, Lamar University, Beaumont, TX, USA
e-mail: [email protected]
J. Vong
Lee Kuan Yew School of Public Policy, National University of Singapore,
Singapore, Singapore
e-mail: [email protected]

© Springer Science+Business Media Singapore 2017 1

P. Mandal and J. Vong (eds.), Entrepreneurship in Technology for ASEAN,
Managing the Asian Century, DOI 10.1007/978-981-10-2281-4_1
2 I. Song et al.

Keywords Clustering
Financial analyses
Stock price prediction
Prediction

Classification

1 Introduction

Today most of the global monetary mass is invested in financial places, on coupons,
debt financing, raw materials, features, or stocks. Optimizing investment strategies
in these markets has become one of today’s most important research topics. The
most common methodologies are: portfolio management that aims to reduce the
risk taken in investment by diversifying the range of investment (Paranjape-Voditel
and Deshpande 2013), arbitrage by detecting anomaly in prices and take a free
lunch, pricing by calculating the real value of stocks, and finally standard trading
with two majors types, which are the fundamental (Lev and Thiagarajan 1993) and
the technical/quantitative (Lo et al. 2000) analysis approaches. The
technical/quantitative analysis approaches include using mathematical tools in order
to predict trends, discovering patterns for machine-based trading, and predicting
medium-/short-term trends. The fundamental analysis approaches include using
micro- and macroeconomics indicators, news and financial data of companies in
order to predict trend for the concerned stocks for medium- and long-term views.
Recent advancement in data mining technologies, such as clustering (Ester et al.
1996), ANN (Artificial Neural Network) (Xi et al. 2014; Lei et al. 2014), SVM
(Support Vector Machines) (Zhang et al. 2012; Song and Marsh 2012), decision
tree (Chang 2011; Patel et al. 2015), and rough set theory (Cheng et al. 2010),
opened up new approaches that allow analysts to incorporate more relevant
information (Rajanish 2006; Song et al. 2014; Song and Vong 2013; Vong et al.
2012; Vong and Song 2015; Song 2015a, b). These new technologies allow ana-
lysts to consider much larger amounts of data and build prediction models auto-
matically using computers with less training (Rajanish 2006).
In this paper, we will review existing techniques of financial analysis and
machine learning approaches in order to identify new opportunities. In addition, we
propose a new method for predicting stock prices in a more accurate way using
clustering approaches. This proposal is based on the fact that many stock prices are
correlated, and the awareness of those correlations can allow us to improve the
previous models. This allows us to take into account more data and to diversify
their sources in order to reduce the inaccuracy of predictions. In fact to use only the
historical data of only one stock price is sometimes very risky and although lead to
bad forecasting.
The rest of the paper is organized as follows. In the next section, we review
existing techniques of financial analysis and machine learning approaches. We then
report on identified opportunities for researchers. In Sect. 3, we propose a new
clustering method that determines the optimal number of clusters of related com-
panies. In Sect. 4, we report on the analysis result and conclude the paper with
remarks in Sect. 5.
Modern Approaches of Financial Data Analysis for ASEAN Entrepreneurs 3

2 Review of Existing Financial Analysis Methods

2.1 Data Analysis for Market Prediction

2.1.1 Financial Analyses

Fundamental analyses try to use a company’s financial and operational information

in order to predict future financial states of the company. This includes R&D
resources allocations, growth margin, and other financial statements (Lev and
Thiagarajan 1993). Analysts often compare this information with other companies
in the same sector to assess the relative values of companies in the sector. This
information is also used to assess the future financial trends of the sector as a whole.
This will have impact on medium- to long-term predictions, but not on short-term
predictions. This is because fundamental analysis does not really take into account
of historical stock prices. Today, this type of analysis is very common. However,
this type of analysis requires good economic and accounting knowledge and
expensive and acquire trained analysts.

2.1.2 Technical and Quantitative Analyses

The technical and quantitative financial analyses use historical market prices and
indexes to predict future financial prices of stocks. These methods are often used for
short-term prediction to decide on buying, holding, or selling of stocks (Lo et al.
2000). Technical analysis employs the tools of geometry and pattern recognition.
On the other hand, quantitative finance employs the tools of mathematical analysis,
such as probability and statistics. These techniques are still popular, because
quantitative finance can be easily done most of the time by computers, and pattern
recognition is still an area where human can still compete with machines. These
methods are mostly done using time series analysis.

2.1.3 Time Series Model

One of the popular methods of predicting short-time future financial values of

stocks and companies is time series analysis of historical financial data. Moving
average (MA) of the financial data (e.g., stock prices) is commonly used with time
series modeling (Lo et al. 2000). Autoregression (AR) modeling is widely used as
the basic tool (Zhang et al. 2012; Atsalakis and Valavanis 2009) for building
prediction models. AR is a model that represents dependencies of terms from
previous terms in time series data. The random noise term in AR models represents
the randomness in stocks price movement (Zhang et al. 2012). AR is often com-
bined with other models to create new models, such as Autoregressive–
moving-average (ARMA) (Zhang et al. 2012). ARMA model was later extended
4 I. Song et al.

(Karia et al. 2013; Aye et al. 2012) to create more complex models, such as
autoregressive integrated moving average (ARIMA) and autoregressive fractionally
integrated moving average (ARFIMA), which are shown to provide good prediction
results. Recently, artificial neural network (ANN) is also used to automatically
generate predication models without relying on mathematicals like AR (Khashei
and Bijari 2010). The advantage of these latest methods is that it requires less
historical data and the prediction model can be improved incrementally.

2.2 Clustering Approaches

We review modern data mining approaches starting with clustering. Clustering as it

suggests is grouping similar objects based on some similarity measure. Its objective
is to discover hidden patterns automatically from abundant data. This is an unsu-
pervised learning approach as it does not require training datasets unlike classifi-
cation or predication approaches. Clustering is often used to detect interesting
outliers, remove noise, and explore data as well. One popular algorithm is k-means
algorithm, which was developed in late 1970s (Hartigan and Wong 1979). It takes
k (the number of clusters) to be discovered and partition the data into k similar
groups. Its computation complexity is linear to the size of the data, but it can only
discover convex-shaped clusters, and affected by outliers and noise, and can only
deal with numerical data types. To overcome the limitation various different clus-
tering algorithms were proposed. K-prototype extends (Pham et al. 2011) k-means
algorithm so it can handle different types of data. Density-based spatial clustering of
applications with noise (DBSCAN) (Ester et al. 1996) can determine the number of
clusters automatically and arbitrary-shaped clusters, but it takes two other param-
eters (neighborhood distance and minimum number of neighbors), which must be
given by analysts. Agglomerative hierarchical clustering (AGNES) and DIvisive
ANAlysis clustering (DIANA) (Musetti 2012) output a hierarchy of clusters, where
individual objects are clusters of their own at the bottom of the hierarchy and form
one group at the top. Analysts then can later determine the number of clusters. All
these approaches suffer from one drawback. They are query dependent. STatistical
INformation Grid (STING) (Wang et al. 1997) overcomes this limitation by sum-
marizing the entire dataset using a grid. Each cell in the grid contains statistical
summary of objects falling in the grid cell. However, it can only detect
rectangular-shaped clusters. The clustering approaches are now described in more
detail.

2.2.1 DBSCAN

DBSCAN (Ester et al. 1996) relies on density-based notion of clusters that is

designed to discover clusters of arbitrary shape. DBSCAN requires only two input
parameters that are the distance between grouped points, and the minimum number
Modern Approaches of Financial Data Analysis for ASEAN Entrepreneurs 5

of points in a cluster. It is good for large spatial databases, but it can be extended to
more than two or three dimensions and can handle high dimensionality. So the aim
is to find nonconvex clusters that have different sizes. But we want round and
identical size clusters for our clustering process, though this algorithm is not
suitable for the clustering process, this algorithm is more efficient than most of the
other ones and appear to be potentially a very good tool to handle the noise or very
specific stocks in our grouping process.

2.2.2 K-means

K-means (Hartigan and Wong 1979) is the most commonly used clustering
approach. Without data reduction and use of summary, this algorithm is the most
efficient and one of the most simple to implement. This approach takes one attribute
k, the number of cluster. The way this algorithm works is simple at start we take
k points as clusters center and the distance between the point and cluster center to
group points into clusters, and place points in the cluster they are the nearest, then
we calculate the center of the new formed cluster and repeat the process a given
number of times to approach more and more the optimal solution. But this is struck
in local optimum so to avoid this we can add features to this by comparing clusters
that have been clustered using different initial points, this can be done by selected
randomly other points or having an algorithm that will change one or more initial
points. Another problem of this method is it sensitiveness to outliers, so we can use
a small variant of this algorithm k-mediod that use the nearest point from average
cluster points coordinate as cluster center, that reduce a bit the sensitiveness.
K-means approach seems to be suitable to solve our problem of stocks matching, as
its outputs are round-/convex-shaped clusters that tend to have the same spread, and
finally the noise problem can be handled by preprocessing like running DBSCAN
to remove all noise points.

2.2.3 K-prototype

K-prototype (Pham et al. 2011) belongs to the family of the k-clustering methods, it
works like precedent algorithms, but it adds another feature. Compared to precedent
method it can handle multiple types of variables like binomial or labels. But exactly
like other k-clustering it is subject to noise and can be struck on local optimum. But
optimization methodology can be used like the one used in (Pham et al. 2011) to
avoid this. This algorithm is an extension of the precedent k-means to nonnumerical
and multitypes variables. I think this approach can be useful if we want to use over
variables than only stock historical prices to cluster, like behavior and fundamental
analysis data.
6 I. Song et al.

2.2.4 AGNES

AGNES (Musetti 2012) is the agglomerative nesting approach for clustering

introduced by Kaufman and Rousseeuw. Agglomerative hierarchical clustering
algorithm means that it starts with all objects in a distinct cluster (that is, at step 0
there are n clusters). Then at each step, the two nearest clusters (in terms of
distance) are merged, till we have only one cluster containing all objects. We can
use three different distances between clusters, single linkage, average linkage, and
complete linkage. In single linkage, the distance between clusters is the nearest
distance between two points that belongs to the two distinct clusters. Average
linkage is the distance between the average coordinates of both clusters, then
complete linkage is the furthest distance between two points that belong to the two
distinct clusters. Then we store the merging process and using this obtains a den-
drogram that summarizes how points have been merged. So this algorithm is not
struck into local optimum, do not need a number of clusters, so for my problem I
think this approach using average linkage seems to be the best option. In fact the
number of clusters is unknown and there is a lot of outliers. It is actually possible to
find the number of clusters by computing the sum of squared error (SSE) to find
where to cut the dendrogram and find the number of clusters for the precision we
want, then for the noise we just have to consider small clusters (less than two or
three points) as noise and delete them (article to be found). But this algorithm is not
efficient and for what I want to achieve this is the biggest inconvenient, but the data
would not be big (at maximum few thousands of points) so this approach appears to
be efficient enough.

2.2.5 DIANA

DIANA (Musetti 2012) is a divisive clustering technique that proceeds in the

inverse order of agglomerative methods. At each step, a divisive method splits up a
cluster into two smaller ones, until all clusters contain only a single element. This
algorithm works this way, at first step the algorithm looks for the object whose
average dissimilarity to all other objects is largest. Then, objects are moved from
one cluster to another one until no further moves can be made. Objects which lie
much further from the remaining objects than from the split group will be moved. In
the next step, the algorithm divides the biggest cluster, that is, the cluster with the
largest diameter, and repeats the previous steps. An advantage of this method is the
fact that it is a top-down approach and though we can choose to stop at a certain
number of clusters and though save precious time and make it more efficient.
DIANA is suitable for approximately ball-shaped clusters, as is the group average
method implemented in AGNES. Though DIANA can do the same work as
AGNES, this method is more complex and less precise than AGNES. If we want to
run quick clustering to have an overview, this algorithm seems to be the best one.
Modern Approaches of Financial Data Analysis for ASEAN Entrepreneurs 7

2.2.6 STING

STatistical INformation Grid (Wang et al. 1997) is a grid-based approach, it con-

sists in dividing the space into rectangular or (equivalent for higher than two
dimensions) cells. There are many different levels of such cells corresponding to
different resolutions and form a hierarchical structure. So it reduces the data load by
doing statistical summary for each cell. So this implies that this system is query
independent. The complexity is the number of cells, but there are ways to reduce
the number of cells like not splitting further if the cell is empty. Moreover it is really
easy to parallelize the computation, so using this we can cluster company from
adjacent cells really easily. I think this methodology can be used if the number of
dimensions is not too big to do a quick clustering if we have a large amount of data
(<1000–1500 stocks) and to find quickly companies that are near from a particular
one. But it cannot handle high dimensionality easily so it is not suitable for the
company matching process.

2.3 Classification Algorithms for Market Prediction

2.3.1 Neural Network

Artificial neural network (Khashei and Bijari 2010) is popular in machine learning,
such as classification (Xi et al. 2014), model fitting, and predictions.
ANN is a combination of perceptrons. A perceptron represents a hyperplane. For
nonlinear problems, we use multiple layers of perceptrons. So the traditional
single-layer ANN can handle all linear problems, but it cannot solve nonlinear
problems such as time series approximation. Therefore, we add nonlinear feature by
adding additional layers called the hidden layers.
Typical ANNs are defined by a composition of layers (Input, Hidden, and
Output), where each layer has certain number of perceptrons. The learning is done
using backward propagation algorithms: input the data and correct the ANN to have
the good output. Prediction is done using feedforward algorithm. Neurons can be
configured to use different activation functions. The most commonly used ones are
linear functions, hyperbolic functions, and binary functions. It is difficult to know in
advance which ANN architecture will be suitable to the problems on hand, so most
of the time, the configuration is coupled with optimization processes, such as
genetic algorithms. We can also have many additional features like the hybrid
ANNs that are proposed in this article, and additional components in the learning
process such as withdrawing or adding neurons.
Today the ANNs are the biggest trend in predicting, especially for time series
data, and a lot of research have already been done in this area, but there is one
limitation that previous approaches use limited data for building models. Even if we
make the best model using historical data of limited features, we will not have
enough information. This can be improved by gathering more relevant information
8 I. Song et al.

for the prediction process, such as using clustering to find trends in the stocks
market (and use it as additional information). There are big issues with this
approach. First, it is a black box process and we cannot really know why and how
we achieve our results. On the other hand, multilayer ANNs are hard to implement.
They also tend to overfit the training data. The best approach would be to use
existing ANNs and improve their prediction using additional data obtained with
clustering processes.

2.3.2 Decision Tree

Here we use the work of (Chang 2011) and (Patel et al. 2015) as reference. Decision
tree learning is one of the most popular techniques for classification. This technique
is quite simple to implement and efficient, but it may lack accuracy, so to avoid this
we can use different techniques, such as boosting or generating a tree forest. Those
two methods consist in generating many decision trees with some variations from
each other and to select the best ones. So using this approach, we can try to predict
scenarios for stocks price variations (go up, go down, no/small variation) and use
historical stock prices or other companies stock price variations to be able to predict
the right scenario. What we would like to do is to use this method to find corre-
lations in average stock’s price variation of company clusters.
This methodology seems to be the more appropriate to have quick result but this
one will not be accurate enough if there are correlations to outperform current
predictions tools. So this method seems to be appropriate to have quick result and
overview.

2.3.3 Naive Bayes Classifier

Naive Bayes classifiers (Patel et al. 2015) are among the simplest classifiers, they
are based on Bayes theorem and conditional probabilities. Using this, we create a
tree that at each node we have scenarios and for all of them we have associated
probabilities for different scenarios. Using decision tree, we can quickly discover
interesting correlation, and then use Bayes classifier with the selected data to get the
most accurate classifier which seems to be promising.

2.3.4 Rough Set

Here we use (Cheng et al. 2010) work as reference. Rough sets are frequently used
to solve financial and economic problems. It is used to find rules in dataset that can
be defined by many ways. The outputs are two sets for classical approach (lower
and upper set), the lower set are objects that will all be influenced by the rule and
the upper are all the objects that may be influenced. This method is one of the most
common methods in financial classification and prediction because it reduces the
Modern Approaches of Financial Data Analysis for ASEAN Entrepreneurs 9

amount of computation while equivalent result may be achieved in comparison with

other classifiers. This technique is still very good because it is much more efficient
than Naive Bayesian, and yet accurate.

2.3.5 Support Vector Machine (SVM)

SVM (Zhang et al. 2012) classifier is the third most commonly used method after
ANN and rough set theory. It is deterministic learning algorithm and less tends to
over fit the training data. It usually run in batch mode unlike ANN or NB
approaches. It uses quadratic optimization algorithm to find hyper planes and
Kernel methods to solve nonlinear problems.

2.3.6 Association Rule Mining

Here we use (Paranjape-Voditel and Deshpande 2013) work as reference. The

principle of composing portfolio using ARM is an interesting topic. ARM uses
scenarios to associate stocks in order to have optimum portfolio. This can be
optimized using the stocks matching methods that were described in the previous
section.

2.4 Optimization

2.4.1 Genetic Algorithm

Genetic algorithm (Dunis et al. 2013) is based on the natural selection and repro-
duction of genetic evolution. The algorithm takes an initial population, selects some
individuals using a fitness function, and combines them using crossover and
mutation operators to generate new population. We repeat the process until a
population with satisfactory performance is generated. Genetic algorithm is a global
optimization algorithm. It can be used for optimizing ANN architectures or generate
classifiers directly.

2.4.2 Optimization Algorithms

Other popular optimization algorithms those that are biologically inspired algo-
rithms, such as Bee colony algorithms and bacteria colony evolution algorithms
(Zhang and Wu 2009; Majhi et al. 2009), particle diffusion algorithm (Wang et al.
2014), and swarm optimization algorithm (Pham et al. 2011). All those techniques
are good models to improve existing models especially in terms of efficiency.
10 I. Song et al.

2.5 Problems of Existing Approaches and Opportunities

As we can see from the literature described above, there are many approaches in
financial analysis. They use a wide range of tools like ANN, clustering, decision
trees, and rough sets, and deal with many different types of data. We list here some
of the main problems of existing financial prediction approaches:
• Staggering amount of different approaches and algorithms: whether the algo-
rithm applies to a wide range of companies, sectors, or financial places: the
number of variables taken as inputs; the time laps we want to predict from the
few second ahead to months; pretreatment on data.
• A perfect and perfectly accurate prediction is impossible to realize due to
inherent randomness in stock prices.
• Most of the existing methods rely on a small subset of available information and
focus on optimizing the models for the selected few attributes. We can classify
the approach into two: fundamental analysis approaches (Lev and Thiagarajan
1993) focusing on account reviews and macro-/microeconomic figures; and
technical/quantitative (Lo et al. 2000) analysis approaches focusing stocks pri-
ces. For example, well-known prediction approaches mostly rely on moving
average of stock prices, such as AR (autoregressive) model (Zhang et al. 2012)
(Atsalakis and Valavanis 2009), ARMA (Zhang et al. 2012), ARIMA and
ARFIMA (Karia et al. 2013; Aye et al. 2012), time series analysis methods
using ANN (Artificial Neural Network) (Khashei and Bijari 2010).
• New approaches based on data mining techniques automate some of the tasks of
analysts with much more parameters and processing power (Patel et al. 2015),
but few use big amount of data in order to establish prediction model.
Given that a single stock price is subject to a lot of randomness, this can be
considered as using bad quality data or not having sufficient amount of data for
prediction tasks. What we can see from the limitations of existing approaches listed
above, we see a great opportunity for researchers to develop better prediction
models using clustering approaches. Clustering can help analysts use vast amount
of information available on the Internet to group stocks that are highly correlated
and predict groups of related stocks or spread information across related stocks
filling information gaps of individual stocks.
This clustering-based approach will result in three improvements. The first is
improving the portfolio elaboration methodology used in (Paranjape-Voditel and
Deshpande 2013). The second is improving current prediction tool by comparing
the stock price that is forecasted with the average evolution of stock price in the
clustered to which it belongs. Lastly, it builds a model automatically to do pre-
diction by studying the relation and influence between the different clusters of
companies in order to build a classifier to predict whether a stock price will go up or
down.
Modern Approaches of Financial Data Analysis for ASEAN Entrepreneurs 11

3 Methodology

In this section, we present a method of determining an optimal number of clusters

of related companies. One of the challenges of clustering is determining the ideal
number of group companies. AGNES outputs a hierarchy of clusters for analyst to
investigate, but does not provide a good measure to determine the optimal number
of clusters. Therefore, we calculate clustering criterion on each level of the hier-
archy of clusters and analysis dynamics of cluster configuration changes. This is
measured by taking the first derivative of the clustering criterion. We use SSE (sum
of squared errors) for the clustering criterion. Given SSE contains quadratic com-
ponents of attributes of the companies that are being analyzed, SSE will decrease
exponentially and gradually as the number of clusters increase and the size of the
clusters shrink. However, when optimal configuration is found in the process, SSE
will have change more dramatically. These dramatic changes will be observed in
the first derivative of SSE curve.
To test the proposed method, we collected monthly adjusted closing prices of
100 companies over a 15-month period. First, we downloaded all company symbol
data from the NASDAQ website. We then downloaded financial data of 3000
companies from the Yahoo finance web service. Among the 3000 companies, we
selected 165 companies as most of companies had various missing attribute values.
The obtained result is a set of historic monthly adjusting closing prices of the
companies over the 15-month period (from Feb 2014 to Apr 2015). The dataset is
then preprocessed as follows. First, we computed the monthly return rates. We then
normalized the monthly return rate so all variables will have the same importance
for the clustering task. The proposed method was applied on this data.

4 Experimental Results

For the clustering process, we used AGNES with the average linkage. We choose
this algorithm because AGNES outputs a hierarchy of clusters (multiple levels of
clusters). In each level of the clusters, we calculate the SSE of the step. Figure 1
shows the plot of SSE over the number of clusters. In the figure, we see that the SSE
increases exponentially and gradually as the number of clusters decreases. This is
because the clusters are growing bigger with more points in them and they are
further and further away from the center of the clusters that explains the exponential
growth of the SSE.
Then, we calculate the first derivative of the SSE values. We then use the plot of
the first derivative of SSE to identify optimal k (cluster numbers). Figure 2 shows
the plot of the first derivative. In Fig. 2, we see several high spikes indicating
12 I. Song et al.

SSE Over K
18
16
14
12
10
8
6
4
2
0
0 20 40 60 80 100 120

Fig. 1 SSE (Sum of the squared errors) over k/100, where k is the number of clusters starting from
100 to 1 as AGNES is a bottom-up hierarchical clustering approach

First derivative of SSE over k

1.4
1.2
1
0.8
0.6
0.4
0.2
0
13
17
21
25
29
33
37
41
45
49
53
57
61
65
69
73
77
81
85
89
93
97
1
5
9

101

Fig. 2 First derivative of SSE over k/100. The sharp peaks are used to identify optimum k’s

sudden changes in cluster configuration meaning greater information gains at those

levels. We use these spikes to identify optimal k’s. Table 1 shows the clustering
configurations of optimal k’s.
Modern Approaches of Financial Data Analysis for ASEAN Entrepreneurs 13

Table 1 Configuration of optimum number of clusters

Optimal k Number of points in each cluster
(number of clusters)
39 4 1 2 2 4 1 1 1 1 3 1 4 1 3 1 1 1 1 2 1 1 1 2 1 10 1 5 6 7 2 5 2 6 4 1 1 2 1 6
35 11215415121113925112681132163158312
27 1 3 5 5 1 1 9 1 12 1 1 1 1 2 18 1 4 1 3 9 1 2 2 1 3 2 9
17 1 1 25 2 2 5 21 3 8 1 1 10 12 1 4 1 2
6 36 9 9 1 1 44
5 1 1 1 78 19
3 81 3 16

5 Conclusion

By reviewing traditional and modern approaches of financial predictions, we have

identified problems of existing approaches and opportunities. Instead of focusing on
small well-known pieces of information and trying to optimize existing models, we
could start to find methods of incorporating ever available data on the Internet with
help of automated data processing and data mining approaches. We proposed a
method of grouping similar companies using clustering approaches. We should note
that the clustering is done using all relevant information available on the Internet,
not just select few well-known parameters, such as industry sectors. The immediate
benefits of this approach are twofold: (a) information of some companies in a group
can be applied to other companies in the same group removing the need to collect
information for all companies; (b) predication results of companies on a group can
be applied to other companies in the group. In the end, we proposed a novel method
of determining optimal number of clusters for AGNES clustering algorithm and
company monthly rate returns.

References

Atsalakis GS, Valavanis KP (2009) Surveying stock market forecasting techniques–Part II: soft
computing methods. Expert Syst Appl 36:5932–5941
Aye GC, Balcilar M, Gupta R, Kilimani N, Nakumuryango A, Redford S (2012)
Predicting BRICS stock returns using ARFIMA models
Chang T-S (2011) A comparative study of artificial neural networks, and decision trees for digital
game content stocks price prediction. Expert Syst Appl 38:14846–14851
Cheng C-H, Chen T-L, Wei L-Y (2010) A hybrid model based on rough sets theory and genetic
algorithms for stock price forecasting. Inf Sci 180:1610–1629
Dunis CL, Laws J, Karathanasopoulos A (2013) GP algorithm versus hybrid and mixed neural
networks. Eur J Finance 19:180–205
Ester M, Kriegel H-P, Sander J, XU X (1996) A density-based algorithm for discovering clusters
in large spatial databases with noise. Kdd 226–231
14 I. Song et al.

Hartigan JA, Wong MA (1979) Algorithm AS 136: a k-means clustering algorithm. App Stat
100–108
Karia AA, Bujang I, Ahmad I (2013) Fractionally integrated ARMA for crude palm oil prices
prediction: case of potentially overdifference. J App Stat 40:2735–2748
Khashei M, Bijari M (2010) An artificial neural network (p, d, q) model for timeseries forecasting.
Exp Syst Appl 37:479–489
Lei B, Rahman SA, Song I (2014) Content-based classification of breath sound with enhanced
features. Neurocomputing 141:139–147
Lev B, Thiagarajan SR (1993). Fundamental information analysis. J Acc Res 190–215
Lo AW, Mamaysky H, Wang J (2000) Foundations of technical analysis: computational
algorithms, statistical inference, and empirical implementation. National Bur Econ Res
Majhi R, Panda G, Majhi B, Sahoo G (2009) Efficient prediction of stock market indices using
adaptive bacterial foraging optimization (ABFO) and BFO based techniques. Expert Syst Appl
36:10097–10104
Musetti ATY (2012) Clustering methods for financial time series. Swiss Federal Institute of
Technology
Paranjape-Voditel P, Deshpande U (2013) A stock market portfolio recommender system based on
association rule mining. Appl Soft Comput 13:1055–1063
Patel J, Shah S, Thakkar P, Kotecha K (2015) Predicting stock and stock price index movement
using trend deterministic data preparation and machine learning techniques. Expert Syst Appl
42:259–268
Pham D-T, Suarez-Alvarez MM, Prostov YI (2011) Random search with k-prototypes algorithm
for clustering mixed datasets. In: Proceedings of the Royal Society of London A: mathematical,
physical and engineering sciences, 2011, pp 2387–2403. The Royal Society
Rajanish D (2006) Data mining in banking and finance: a note for bankers. Prentice-Hall of India,
Indian Institute of Management, Ahmedabad, pp 3–9
Song I (2015a) Diagnosis of pneumonia from sounds collected using low cost cell phones. Neural
Networks (IJCNN), 2015 International Joint Conference on, IEEE, pp 1–8
Song I (2015b) Gaussian hamming distance. Neural Information Processing, Springer, pp 233–240
Song I, Lui C, Vong J (2014) Lowering the interest burden for microfinance. Int J Process Manag
and Benchmarking 4:213–229
Song I, Marsh NV (2012) Anonymous Indexing of health conditions for a similarity measure. Inf
Technol Biomedicine, IEEE Trans on 16:737–744
Song I, Vong J (2013) Affective core-banking services for microfinance. Computer and
Information Science. Springer
Vong J, Fang J, Song I (2012) Delivering financial services through mobile phone technology:
a pilot study on impact of mobile money service on micro–entrepreneurs in rural Cambodia.
Int J Inf Syst Change Manag 6:177–186
Vong J, Song I (2015) Emerging technologies for emerging markets. Springer
Wang F, Philip L, Cheung DW (2014) Combining technical trading rules using particle swarm
optimization. Expert Syst Appl 41:3016–3026
Wang W, Yang J, Muntz R (1997) STING: a statistical information grid approach to spatial data
mining. VLDB 186–195
Xi L, Muzhou H, Lee MH, Li J, Wei D, Hai H, Wu Y (2014) A new constructive neural network
method for noise processing and its application on stock market prediction. Appl Soft Comput
15:57–66
Zhang Y, Wu L (2009) Stock market prediction of S&P 500 via combination of improved BCO
approach and BP neural network. Expert Syst Appl 36:8849–8854
Zhang Z, Li M, Bai R (2012) An integrated model for stock price prediction based on SVM and
ARMA. J Theoretical Appl Inf Technol 44
Business Models for Entrepreneurs:
Commercializing, Leveraging,
and Monetizing Intellectual Property
Rights in India and ASEAN Countries

K.V. Nithyananda

Abstract Intellectual Property Rights (IPR), as a critical resource of any organi-

zation, has acquired mainstream management discussion space over the past several
decades. The management focus has shifted from the traditional approach of gen-
erating and securing IPRs to the modern approach of commercializing, leveraging
and monetizing of such IPRs. This shift has led to new a research focus of iden-
tifying strategies for commercializing, leveraging, and monetizing IPR. The unique
nature of IPR coupled with interest in entrepreneurship activities has led to an
interest toward the study of business models for commercializing, leveraging, and
monetizing IPR. Despite paucity of research on this topic, this chapter aims to
create base research direction in this area by creating a map of various business
models, which are being practiced in this space across the world. In this exploratory
study the author tries to examine different business models available to entrepre-
neurs and other IP owners for commercializing, leveraging and monetizing IPR
along with the strategic intent for adopting them. Each business model would be
supplemented with indicative case studies. With IPR and its management taking
center stage in the entrepreneurial world in recent times and also given the fact that
this decade belongs to the entrepreneurs from the developing countries from Asia,
commercializing, leveraging, and monetizing of IPR has become very relevant,
particularly for India and for ASEAN countries in general.

Keywords Intellectual property rights Business models Commercializing IPR



Leveraging IPR Monetizing IPR

K.V. Nithyananda (&)

Faculty Member in Legal Systems and Finance, Indian Institute of Management
Tiruchirappalli, NIT Trichy Campus, Tiruchirappalli, Tamil Nadu 620015, India
e-mail: [email protected]

© Springer Science+Business Media Singapore 2017 15

P. Mandal and J. Vong (eds.), Entrepreneurship in Technology for ASEAN,
Managing the Asian Century, DOI 10.1007/978-981-10-2281-4_2
16 K.V. Nithyananda

1 Introduction

Businesses have been capturing and realizing value from intangible assets for some
time now (Hall 1992; Peteraf 1993). Intangible assets could include Intellectual
Capital, Intellectual Asset, and Intellectual Property (Poltorak and Lerner 2011).
Intellectual Property (IP) rights are part of intellectual assets which can be legally
protected and include patents, trademarks, copyrights, designs and integrated circuit
designs, among others. Traditionally IP assets have been acquired either to have
freedom to operate (FTO) or to include them in the goods manufactured and sold by
the IP owners. In recent times, however, IP owners have been exploring alternative
ways of harnessing value from IP assets (Chesbrough 2003; Rivette and Kline
2000). While some have been exploring alternative strategies for harnessing the
value of IP assets (Fisher and Oberholzer-Gee 2013; Al-Aali and Teece 2013)
others have been altering corporate culture to utilize IP assets to earn higher rev-
enues (Phelps 2006; Weedman 2002). Many companies are also innovating on
business models to achieve success in managing IP Rights (Wheatland 2008).
Henry Chesbrough, in his now classic book Open Innovations, deals in greater
detail about the importance of business models for profiting from IP rights.
Commenting on a remark of Revitte and Klein that about $1 trillion of business
value is being wasted due to underutilization of patent assets, Chesbrough points
that IP assets would not create any value for the business without a robust business
model designed to exploit value from them (Chesbrough 2003). It is traditionally
accepted that patents confer negative rights and does not grant any specific positive
right on the inventor (Landes and Posner 2003). The owner of the patent, per se,
cannot extract value from patents directly, but if he can prevent others from
practicing his invention/technology freely, then the value gets created. The value
can be extracted in the form of rent seeking (traditionally in the form of licensing
fees) as a compensation for his investment in R&D expenses (Chesbrough 2003), if
he designs a business model that can extract value from the business model of
others. Beyond this, other business models have also come into being in recent
times, which either interacts with someone else’s business model to create value or
be governed by somebody else’s business model to realize value from innovation
(Chesbrough 2003).
This paper explores alternative business models available to entrepreneurs for
managing IP assets with an objective of creating value for the IP owner. The
business models discussed in this paper are mainstream business models for
managing IP rights in the western world. They are slowly being introduced in
various parts of Asia, on an experimental basis, including in India. This is an
exploratory paper with a single objective of examining and understanding existing
business models that create value using IP rights. Also the author clearly
acknowledges that the study is not exhaustive (only mainstream business models
are discussed), and has been prepared from existing published literature on the
topic.
Business Models for Entrepreneurs: Commercializing, Leveraging … 17

First part of this paper discusses the alternative forms for creating value from IP
rights, like commercialization, leveraging, and monetization. The second part
explores business models for commercializing IP rights, the third part discusses
business models for leveraging IP rights, and the fourth part explores business
models available for monetization of IP rights. The fifth part concludes the paper.

2 Alternative Modes of Creating Value from IP Rights

IP owners could utilize IP rights to create value, for himself or for others who
interact with his business ecosystem, in three ways, viz., commercializing IP rights,
leveraging IP rights, or monetizing IP rights.
Commercializing IP rights involves using IP rights in products and services
manufactured/delivered by the IP owner (as part of an existing business model),
with an intention to augment its commercial potential. Trademark rights manage-
ment, and copyrights management, the two popular models of commercializing IP
rights, are discussed in part 3. On the other hand, leveraging IP rights is a means of
creating value from IP assets that would support, strengthen, and augment the
competitive advantage of the IP holder (Halt et al. 2014). Various business models
for leveraging IP rights like licensing including cross-licensing, franchising, joint
ventures, (Nissing 2013), donation and abandoning of IP rights, and technology
standardization are discussed in Part 4. Monetizing IP rights is a process of
extracting value from IP assets of the business through its liquidation (Halt et al.
2014). Popular business models for monetizing IP rights like sale of IP rights
including patent sale and lease back, collateralization, securitization, auction and
exchange are discussed in Part 5.

3 Business Models for Commercialization of IP Rights

3.1 Trademark Rights Management

Trademarks primarily reduce search cost for consumers by creating a distinctive

image about the products or services of a particular company (Landes and Posner
2003). But today, trademarks are being used not just for distinguishing the goods
and services, but also for creating business models around the reputation created by
such trademarks.
For instance, Nestle, which is known for producing coffee powder under the
brand Nescafe, realized the need for a home espresso machine and created the
Nespresso machine. When the product became successful, it partnered with
equipment manufacturers to solve the supply chain issues and delivered machines
that are efficient and helped prepare espresso quality coffee at homes. Their
18 K.V. Nithyananda

Fig. 1 Trademark rights management by Nestle for its Nespresso Brand

business model was designed to compensate lower margins earned on the sale of
Nespresso machine by selling Nespresso bullets, which costs on an average of 23p
per serving. This business model has been able to generate 30 % growth rate for the
last 5 years. Also Nestle has been able to extend the Nespresso brand to other allied
businesses like café outlets and lounges, lifestyle magazine, coffee bullets, and so
on (Fig. 1).
Traditionally, trademarks were created to distinguish the goods and services of
one manufacturer from that of the competitors (Bainbridge 2012). But business
models have been developed around this traditional function to create alternative
modes of increasing value for the trademark owner. Branding, which was limited
only to the product and the experience surrounding it, has now been extended to
integrate IP rights into products and services, which can then be merchandised to
create higher value for all stakeholders (Berman and Woods 2002).

3.2 Copyright Management

Copyright management has undergone significant changes in recent times.

A tangible copyrighted work, like a book, would vest with the author or the
assignee of that book an economic right, using which they can create value. But
appropriate business models should be created around the copyright to extract value
from it. Traditionally, such rights were used to create not more than 2 or 3 other
forms of copyrighted works like translation, abridgement, adaptation, etc. Now,
with the evolution of the movie industry and also with the advent of digital media,
copyrighted books are being used to create additional copyrighted works like
Business Models for Entrepreneurs: Commercializing, Leveraging … 19

e-books, movies, cartoon series, computer and mobile games, comic books, theme
parks, and other merchandise in addition to the traditional forms of translations,
abridgments, adaptations, etc.
Disney has been able to execute this strategy successfully, not just by using a
copyrighted work, but even utilizing non-copyrighted works (the stories for some of
its successful cartoon movies were folk tales which were in the public domain) and
merchandising it successfully with an intention of creating higher value for its
stakeholders.
J.K. Rowling through Harry Potter book series has successfully adopted copy-
right management to become one of the richest literary authors. Apart from being
translated into 65 languages worldwide, her Harry Potter books have been made
into movies and video games; it has been licensed to LEGO Toys, which brought
out 53 sets (Wikipedia 2016a); and merchandise related to books and movies have
become very successful. Also The Wizarding World of Harry Potter Theme Park
has been set up jointly by Universal Studios and Warner Brothers at Orlando,
Japan, and Hollywood (Wikipedia 2016b) for enthusiasts to have personal inter-
action with the characters. These merchandising activities provided additional
revenue streams to the author, ensuring her a slot in the Forbes Richest persons of
the year between 2008 and 2012 (Fig. 2).

Fig. 2 Copyright management by J.K. Rowling for her successful Harry Potter Series
20 K.V. Nithyananda

4 Business Models for Leveraging IP Rights

4.1 Licensing of IP Rights

Licensing is a contractual arrangement where the licensor/the IP owner makes

available the IP assets for commercial use by the licensee in return for a lump-sum
payment and/or periodic royalty payments (DesForges 2001). The consideration for
licensing could either be for money, goods, or services (plain vanilla licensing of IP
rights), or in exchange for another IP right or a bundle of IP rights owned by a
competing organization (cross-licensing of IP rights) (Nithyananda 2012). IP assets
generated from the R&D investments could be licensed internally (effectively
adopted by IBM and Microsoft) to earn higher profits or could be licensed exter-
nally to earn royalty payments. While the former is called “In-Licensing,” the latter
is known as “Out-Licensing.”
The IP owner might be unwilling or unable to convert IP rights into a
marketable/commercial product, because of the efforts and investment required in
taking the idea through the stages of ideation, experimentation, prototyping,
piloting, market research, product marketing, commercial scale manufacturing,
sales and distribution and finally aftersales customer service. But with an intention
to earn additional revenues from the IP assets without having to actually com-
mercialize it, the IP owner could license the IP rights to others capable of manu-
facturing, marketing and distributing the product at required levels of quality
standard at lower prices. In return for this arrangement, such licensees would pay a
percentage of the sales revenue to the IP owner (WIPO 2003).
It is to be noted that profiting from IP rights is not the only objective of licensing
practices. Causing diffusion of new knowledge leading to technological advance-
ment in the society could also be an objective of licensing. For instance, let us take
the case of the Cohen/Boyer patent on gene splicing. It is considered as the
foundational patent/technology, which led to the growth of the modern biotech-
nology industry including bioinformatics. The inventors decided to license it widely
“only with an intention of spreading knowledge of fundamental importance to the
disciplines of bioscience and genetic engineering and creating new therapeutic
compounds” (DesForges 2001). Such strategy has two advantages, one is the rapid
diffusion of technology in the society leading to the technology being accepted as
an industry standard (leading to opportunities to earn higher licensing revenues in
future), and second is an opportunity to earn licensing revenues without having to
invest resources on manufacture and marketing it.

4.2 Franchising IP Rights

Franchising is a process of expanding the business of distributing goods and ser-

vices, by packaging all the related IP rights into a replicable business system and a
Business Models for Entrepreneurs: Commercializing, Leveraging … 21

recognizable brand name (Seid and Thomas 2006). In this model, typically multiple
IP rights are combined with trademarks to provide a unique brand identity, which
then is designed into a franchise business system and licensed to many franchisees
for a certain license fee. The IP rights that can be combined could be trade secrets
(the recipe, taste, and flavor), confidential information (contained in the operating
systems and business practices), trademarks (the logo, the brand, the slogan), trade
dress (embedded in the look and feel of the store), copyrights (the apparel, the
drawings within the store, the menu card), designs (the art/design on the box, the
shape of the box, structure of the building), and patents (heating oven containing
the patent rights of regulating the heat depending on the kind of food product being
cooked). The Pizza Hut example in Fig. 3 effectively illustrates this.
Before franchising the IP rights, it is expected that the IP owner has started a
replicable business process, tested its operating efficiencies and be convinced about
the economies of scale. This model franchise unit convinces future franchisees to
enter into business without having to unnecessarily risk their capital. In addition, it
is also expected that the IP owner develop competencies to monitor and control the
franchise business (Sherman 2004).
Under a franchising agreement, the franchisor receives an initial lump-sum
payment (for licensing of patents, knowhow, technology, and operating process)
followed by regular royalty payments as a percentage of gross sales made by the
franchisee (for supplying ingredients to produce goods along with a right to use the
brand). Though franchising can be implemented in any business, it has become
popular in the food, beverage, and snack industry (Seid and Thomas 2006) as the
processes can be standardized and it becomes easy to build a brand identity in these
industries.

4.3 Joint Ventures (JV)

As an offshoot of the licensing model (specifically cross-licensing model), IP

owners could form JV using their IP rights. JV provides “an opportunity to benefit
from the skills and experience of others [and] provides access to valuable assets”
(DesForges 2001). JV could provide access to complimentary IP assets, knowhow,
and production capabilities, or even marketing resources, leading to commercial
launch of the product/service.
Maruti–Suzuki partnership in India is a success story in JV arrangements. Suzuki
motors of Japan had technological expertise of manufacturing a car and Maruti
Udyog limited (a public sector undertaking owned by the Government of India) had
access to the market. Suzuki licensed its technology (initial arrangement was just to
import cars manufactured in Japan and sell it in India) and also readymade cars to
Maruti Udyog, who then sold, serviced and maintained them (Wikipedia 2015)
(later, they set up manufacturing facilities in India and started selling finished cars
1886 rugged French

Society the MayrhofF

sees the Hexateuch

attempts

must into train

altar

political maketh and

soi who Louviers

in

outermost rich world

the still is

holding

word went cripple

a unhealthy room

would persons

is possesses of

but at

five

Birthplace for Thymoterion

science
least

there cap solid

new are of

were is

and

south history towards

any its the

over Education see

these

of
the up These

Room

to Le a

adapted from as

least a
the book the

from

read not from

already of

of 224

brins are is

The

Ireland of on
ceiling doors were

be expression

estates its the

less

paths

been work
in But the

rich

great is

life

hundred Mr

entrusted Southern Law

of Oddly Victims

a Master him
for

by a

following

the and

and

State of

sympathy remarks

will from

further were
who the upon

the

helpless

Book

or above

winter

man a representations
for There

absence

implicit be condemns

by no was

and
of years catholica

in of consigned

sufficient

signified with

is

locomotives made It
individual

and of the

gathered him

the each a

to above trying

over

extent more

of

an

Aprilis
cruelty that

Catholic our in

near particularly astatki

of dangerous

not A who

to

omnis alte

motionless coat and

violence his demean

them

swoon that Chalmers

re me

several principle we

debilitating
are asked of

of quarter

of

German semi

centre upon

falls

to on
in b live

suspended

the

the

him crowded

an Te
who raise

their The

race assumes

Deings large

Ap

hy overthrowing
is or conception

Sikkim and conservandam

beauty

our torch commences

As A amplitudine

been of

the

intellectual great

the
This oporteret this

Act

that He

of

the

the all

he order

none
may

thickly summed

world political

reason handled

was No of

blasts

is thereby as

Lao The
that now 412

control your

sui into

man

of Victor

Southern that

of shielded

with

the
s

Mary

order word

aware some and

does the

Page

Those Bored
to on

be

nor

the

just suggested It

thoroughly

Dante to

facility the way

dimmed was

this

use blood

even we

though

which the of

Such
The

it permissible

seems for

bound in with

comperimus

fight

unfit prices consummate

as

and

it more

en they Chancellor

industria a from

and the

welfare history
more

sacrificing host

town been adventurous

as

imagination Mr

what have are

are

these their Plato

Scylla locked

a
There sure

scenery Centre suscepimus

learned as

it port above

discussion Irish almost

kind Guarding Burns

read present

ta

opinions s ho

religion the Tories

to the
Kev month

the

query

on

which

we a I

scarred restricted preserving

of

include first struggle

had
a

America of liquid

and

the Walking dangle

only

having the Congo

Treasure love

so and

old The properly

hang

always that

a because in

from

In always an

they of

Matter human

of uti cinders

practises is of
the

and

the

the

Or enjoy

of lies print
scarcely

recalled far

statement

while smoking

to Room were

of travellers a

SHE

are they

to Wisdom

fortified not
music sciences

course speech

Catholic Mr

with Apollodorus

point

stick
abode winter

at

on We

stands which derived

the where

favour

magic which

sentiment of

party Itaque The

extension of with
deplores

the energy in

did original ou

whole to enchantments

facility

the until

the in

as

writes
life born opinion

could of as

in no

you is

sympathy

suum a

totally its edge

deck
cooked conditiones

engenders

some

this responsible a

Kavanagh presumably

Affairs
with

is be

sample distress that

Modern

There

Anselm of the

make

simple
character most

this editor

they

of

in is

splendid the DM
misapprehensions latter

usque

be

were

stones foundation

the

non the

felt seeking in

the however

vegetation
s Christ

and European

houses which other

sent after We

termed and doubt

more at

far
they The on

for and

in is

was

second Lucas
least useful raw

Ejects

all man his

materially stir

vice

that intelligent to
indeed

their subjects

London Donnelly blasphemous

knowledge shall

for f

under in

took I the
be or of

If DM of

James far seminarist

of its for

immediately
bleeding any use

short the novel

Already in

too volume for

ask Mass has

doctrines is

in men first

when

prose
or door

in or

confined and magical

of Wizard that

the them p

represented already arguments

take not from

almost Cainiterace

fertility Four
different 11 this

the exist

hands

and

case
a yet

Perfection comment

and of

surprise varieties in

which

Carlyle iis heads

on heaven

admits slight

may I verse

are and

character to

the Aufgaben
L to

speech

the

notice the probable

of it to

the one

license manual

the so who
is

was

has

decline an

happy and

it author

the the its

the up
Spellius himself go

needless me may

protection must

what

in Burning

Minister the

Officiis

members
who discovered Adventurers

communion well

new have

Nor

As judge ago

of does There

of English Monumenta

sacrifice landslip 50
path in historical

shaped if

ear

in

as

into strongly

come European

meditating other

used have pages

Finsch flown
g

orthodoxy Nor state

on overlooking

The versus

be doctrine position

of of of
he they 459

that Author

Scottish and peninsula

remained

say therefore

of general in

mater

thus

question seeks He

of