The impact of patenting activity on the financial performance of Malaysian firms

Farha Ghapar, Robert Brooks and Russell Smyth

Journal of the Asia Pacific Economy, 2014, vol. 19, issue 3, 445-463

Abstract: This study analyses the relationship between patenting activity and financial performance at the Malaysian firm level for firms that have been granted patents in Malaysia and the United States of America. We adopt the patent renewal and profit maximization model as our theoretical underpinning for this study. The patenting activity variables are measured based on the patent renewal system and the financial performance variables are measured based on the profit margin. The sample is manufacturing firms. We utilize a panel data-set spanning from 1994 to 2008 and the model is estimated using panel least squares, fixed effects, random effects and generalized method of moments with various types of effects specifications and transformations. The key finding from the empirical study is that there is a significant relationship between patenting activity and financial performance at the Malaysian firm level, but that the impact is rather small and that the signs on the coefficients are mixed. This result may reflect the level of competition that the firms faced over the period of the study, even though patenting is well known for giving firms some monopoly power.

Date: 2014
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Working Paper: The Impact of Patenting Activity on the Financial Performance of Malaysian Firms (2013)
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DOI: 10.1080/13547860.2014.908536

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