The lag structure of the relationship between patenting and internal R&D revisited

Ning Wang and John Hagedoorn

Research Policy, 2014, vol. 43, issue 8, 1275-1285

Abstract: The principal purpose of this study is to revisit the classic research question regarding the lag structure of the patents–R&D relationship through an examination of the impact of internal R&D on firm patenting in the context of the global pharmaceutical industry during 1986–2000. Our empirical analysis, using both a multiplicative distributed lag model and a dynamic linear feedback model, differs from previous work that examines the patents–R&D relationship in three aspects. First, our estimation results exhibit direct evidence on lagged R&D effects, with the first lag (t−1) of R&D being significant in all distributed lag specifications. Second, a U-shaped lag structure of the patents–R&D relationship is found in most estimations of the multiplicative distributed lag model, which suggests a potential long-run effect of internal R&D investments on firm patenting. Finally, the results from the dynamic linear feedback model coincide with those from the multiplicative distributed lag model, indicating not only lag effects from more recent R&D but also an overall long-run effect of internal R&D investments in the distant past on the knowledge production or innovation process of incumbent pharmaceutical firms.

Keywords: Patents; Internal R&D; Lag structure; Multiplicative distributed lag model; Dynamic linear feedback model; Pharmaceutical industry (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (40)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:43:y:2014:i:8:p:1275-1285

DOI: 10.1016/j.respol.2014.03.010

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