Invention value, inventive capability and the large firm advantage

Ashish Arora (), Wesley Cohen, Honggi Lee and Divya Sebastian

Research Policy, 2023, vol. 52, issue 1

Abstract: Do large firms produce more valuable inventions, and if so, why? After confirming that large firms indeed produce more valuable inventions, we consider two possible sources: a superior ability to invent, or a superior ability to extract value from their inventions. We develop a simple model that discriminates between the two explanations. Using a sample of 2,786 public corporations, and measures of both patent quality and patent value, we find that, while average invention value rises with size, average invention quality declines, suggesting, per our model, that the large firm advantage is not due to superior inventive capability, but due to the superior ability to extract value. We provide evidence suggesting that this superior ability to extract value is due to the greater commercialization capabilities of larger firms.

Keywords: Invention value; Invention quality; Appropriability; Inventive capability; Markets for technology; Firm size (search for similar items in EconPapers)
JEL-codes: D22 D24 G32 L25 O31 O33 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Working Paper: Invention Value, Inventive Capability and the Large Firm Advantage (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:52:y:2023:i:1:s0048733322001718

DOI: 10.1016/j.respol.2022.104650

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