The Protection and Deployment of Financial Innovation

Prevailing theory suggests that firms which effectively protect their innovations from imitation will be able to leverage them to realize a competitive advantage. Using a sample of 1911 financial patents issued during a 25 year period from 1980-2004, we test a model of resource-based imitation. Results indicate that both attributes and deployment affect the rate of imitation. However, the timing of imitation often depends upon contextual factors. Thus, resource deployment actions are critical to erecting sustainable resource barriers.