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Causal Effects of Software Patents on Firm Growth: Evidence from a policy reform in Japan

Isamu Yamauchi

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: The patentability of software dramatically expanded in the United States, European Union, and Japan during the 1990s. Using the exogenous policy change, this paper identifies the causal effect of filing software patents through the policy reform on the firms' subsequent growth. We find that small software firms as well as large firms increase software patent applications due to the expansion of patentable subject matter. However, the results show that such patent explosion has an insignificant effect on larger firms' performance, while it improves the subsequent performance of small and medium-sized enterprises (SMEs). We also find that the number of patent attorneys in the same prefecture has a significant effect only for small firms, which is the main driving factor of improving the firm's performance. These results suggest that broadening the scope of software patents does contribute to innovation, especially for SMEs with a small patent portfolio and business assets through decreasing the cost of patenting activity.

New Economics Papers: this item is included in nep-bec, nep-cse, nep-ent, nep-ino, nep-ipr, nep-sbm and nep-tid
Date: 2018-09
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:18063

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