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Patents and the Success of Venture‐Capital Backed Startups: Using Examiner Assignment to Estimate Causal Effects

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  • Patrick Gaulé

Abstract

I study whether patent protection has a causal effect on entrepreneurial firm outcomes using a measure of patent examiner leniency as an instrument for getting patents. The analysis is based on sample of 1,950 U.S. startups applying for patent protection in the two years following their first round of venture capital funding. I find a positive and large effect of patents on firm success but only for life science firms and more important inventions. I interpret these results as reflecting the importance of patents in appropriating returns to invention in the life science industry.

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  • Patrick Gaulé, 2018. "Patents and the Success of Venture‐Capital Backed Startups: Using Examiner Assignment to Estimate Causal Effects," Journal of Industrial Economics, Wiley Blackwell, vol. 66(2), pages 350-376, June.
    • Handle: RePEc:bla:jindec:v:66:y:2018:i:2:p:350-376
    DOI: 10.1111/joie.12168
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    Cited by:

    1. Freilich, Janet & Shahshahani, Sepehr, 2023. "Measuring follow-on innovation," Research Policy, Elsevier, vol. 52(9).
    2. Kong, Nancy & Dulleck, Uwe & Jaffe, Adam B. & Sun, Shupeng & Vajjala, Sowmya, 2023. "Linguistic metrics for patent disclosure: Evidence from university versus corporate patents," Research Policy, Elsevier, vol. 52(2).
    3. Nagler, Markus & Sorg, Stefan, 2020. "The disciplinary effect of post-grant review – Causal evidence from European patent opposition," Research Policy, Elsevier, vol. 49(3).
    4. Nagler, Markus & Sorg, Stefan, 2019. "The Disciplinary Effect of Post-Grant Review," Rationality and Competition Discussion Paper Series 155, CRC TRR 190 Rationality and Competition.
    5. Heidi L. Williams, 2017. "How Do Patents Affect Research Investments?," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 441-469, September.
    6. Davide Cannito & Cesare Righi & Theodor Vladasel, 2023. "Continuing Patent Applications at the USPTO," Working Papers 1382, Barcelona School of Economics.
    7. Rajaiya, Harshit, 2023. "Innovation Success and Capital Structure," Journal of Corporate Finance, Elsevier, vol. 79(C).
    8. Joan Farre‐Mensa & Deepak Hegde & Alexander Ljungqvist, 2020. "What Is a Patent Worth? Evidence from the U.S. Patent “Lottery”," Journal of Finance, American Finance Association, vol. 75(2), pages 639-682, April.
    9. Michael J. Andrews, 2021. "Historical patent data: A practitioner's guide," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(2), pages 368-397, May.
    10. Donald E. Bowen & Laurent Frésard & Gerard Hoberg, 2023. "Rapidly Evolving Technologies and Startup Exits," Management Science, INFORMS, vol. 69(2), pages 940-967, February.
    11. Righi, Cesare & Cannito, Davide & Vladasel, Theodor, 2023. "Continuing patent applications at the USPTO," Research Policy, Elsevier, vol. 52(4).
    12. Daniel Alonso-Martínez & Nuria González-Álvarez & Mariano Nieto, 2021. "Does international patent collaboration have an effect on entrepreneurship?," Journal of International Entrepreneurship, Springer, vol. 19(4), pages 539-559, December.
    13. Cesare Righi & Davide Cannito & Theodor Vladasel, 2023. "Continuing patent applications at the USPTO," Economics Working Papers 1855, Department of Economics and Business, Universitat Pompeu Fabra.
    14. Nikhil Ramkrishna Bandodkar & Renu Singh, 2022. "Small and Startup IT Firms, Information Chasms, and the Market for Acquisitions," Businesses, MDPI, vol. 2(3), pages 1-21, September.
    15. Righi, Cesare & Simcoe, Timothy, 2019. "Patent examiner specialization," Research Policy, Elsevier, vol. 48(1), pages 137-148.

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    More about this item

    JEL classification:

    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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