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Invention Value, Inventive Capability and the Large Firm Advantage

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

No 30354, NBER Working Papers from National Bureau of Economic Research, Inc

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 greater commercialization capabilities of larger firms.

JEL-codes: O31 O32 O33 O34 (search for similar items in EconPapers)
Date: 2022-08
New Economics Papers: this item is included in nep-bec, nep-ino, nep-ipr, nep-sbm and nep-tid
Note: PR
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Citations: View citations in EconPapers (2)

Published as Ashish Arora & Wesley Cohen & Honggi Lee & Divya Sebastian, 2022. "Invention Value, Inventive Capability and the Large Firm Advantage," Academy of Management Proceedings, vol 2022(1).
Published as Arora, Ashish & Cohen, Wesley & Lee, Honggi & Sebastian, Divya, 2023. "Invention value, inventive capability and the large firm advantage," Research Policy, Elsevier, vol. 52(1).

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