When patents matter: The impact of competition and patent age on the performance contribution of intellectual property rights protection

Daniela Maresch, Matthias Fink, Rainer Harms

Research output: Contribution to journalArticleAcademicpeer-review

7 Citations (Scopus)

Abstract

The question whether patenting impacts patenting firms' subsequent financial performance is important for technology-oriented companies. However, relevant research has led to contradictory results. We strive to overcome this impasse by introducing innovation competition and patent age as moderators of patents' performance contribution into the discourse. Based on a sample of 975 cases from diverse industries, we find strong support for our arguments. In line with our expectations, the results show that the number of patents granted, the degree of patent competition, and the timeliness of a patent contribute positively to financial performance. Moderation analysis nuances our findings by showing that the impact of patent protection on financial performance is stronger when the patent competition is stronger and the patents are younger. These findings provide insights into the conditions under which patenting leads to higher financial performance. Our findings highlight the importance of innovation competition and patent age for innovation research. The empirical results show firms that patenting pays and that, in order to tap the full potential of patents, they need to focus on emerging competing industries and reduce the time to market. Policy makers learn that patenting is a successful approach to foster innovation at limited social costs.
Original languageEnglish
Pages (from-to)14-20
JournalTechnovation
Volume57-58
DOIs
Publication statusPublished - 2 Dec 2016

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Intellectual property
Innovation
Industry
Moderators
Patents
Intellectual property rights protection
Costs
Patenting
Financial performance

Keywords

  • METIS-314196
  • IR-98907

Cite this

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title = "When patents matter: The impact of competition and patent age on the performance contribution of intellectual property rights protection",
abstract = "The question whether patenting impacts patenting firms' subsequent financial performance is important for technology-oriented companies. However, relevant research has led to contradictory results. We strive to overcome this impasse by introducing innovation competition and patent age as moderators of patents' performance contribution into the discourse. Based on a sample of 975 cases from diverse industries, we find strong support for our arguments. In line with our expectations, the results show that the number of patents granted, the degree of patent competition, and the timeliness of a patent contribute positively to financial performance. Moderation analysis nuances our findings by showing that the impact of patent protection on financial performance is stronger when the patent competition is stronger and the patents are younger. These findings provide insights into the conditions under which patenting leads to higher financial performance. Our findings highlight the importance of innovation competition and patent age for innovation research. The empirical results show firms that patenting pays and that, in order to tap the full potential of patents, they need to focus on emerging competing industries and reduce the time to market. Policy makers learn that patenting is a successful approach to foster innovation at limited social costs.",
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When patents matter: The impact of competition and patent age on the performance contribution of intellectual property rights protection. / Maresch, Daniela; Fink, Matthias; Harms, Rainer.

In: Technovation, Vol. 57-58, 02.12.2016, p. 14-20.

Research output: Contribution to journalArticleAcademicpeer-review

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