Age of U.S. public firms, proximity to the past patent portfolio, and innovation

Shotaro Yamaguchi (), Ryuji Nitta (), Yasushi Hara () and Hiroshi Shimizu ()
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Shotaro Yamaguchi: University of Wisconsin, Madison
Ryuji Nitta: Kamigamo-Motoyama, Kyoto Sangyo University
Yasushi Hara: Kobe University
Hiroshi Shimizu: Waseda University

Journal of Evolutionary Economics, 2025, vol. 35, issue 3, No 2, 415-439

Abstract: Abstract Previous studies have documented that firm age has a negative effect on innovation. While firm rigidity has been thought to explain this negative effect of age, it has not been measured empirically. Using the USPTO patent database, this study empirically unpacks the black box of firm age effects on innovation among U.S. public firms. We empirically measure the degree of reconfiguration in firms’ patent portfolio proximity. Our findings reveal the mediating role of rigidity in terms of adhering to the same technological focus in shaping the relationship between firm age and innovation. Furthermore, we highlight a trade-off between invention quality and quantity. Specifically, the greater patent portfolio proximity to firms’ own past is associated with diminished invention quality, albeit an increase in invention outputs. The empirical results provide a managerial implication that a sustained focus on the same technological area leads to diminished invention quality. As firms age, altering the R&D focus emerges as a crucial strategic priority, enabling them to produce higher-quality innovation outcomes.

Keywords: Firm age; Innovation; Productivity; Patent portfolio proximity (search for similar items in EconPapers)
JEL-codes: M00 O30 O31 O32 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s00191-025-00898-6

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