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Patented Innovation and Firm Value in the U.S. Food and Drink Industry: The Economic Importance of High-Quality Product Innovation

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  • Grashuis Jasper

    (Agricultural and Applied Economics, University of Missouri System, Columbia, MO, USA)

  • Dary Stanley

    (Agricultural and Applied Economics, University of Missouri System, Columbia, MO, USA)

Abstract

We use patent data to study product, process, and marketing innovation in the food and drink industry. From 1994 to 2005, only 61 of 194 U.S. public food and drink manufacturers patented some type of innovation. Furthermore, we find patent ownership is most common to large corporations, and most patented innovations relate to new designs and processes as opposed to new products. According to our empirical panel analysis, however, stock market investors find patent ownership of new product innovations the most valuable, although the intensity of patent ownership is not of utmost importance. Instead, we conclude patent quality is better able to explain variability in the stock market valuation of U.S. food and drink manufacturers. Specifically, a one-percent increase in the quality of patented innovations in food and drink products facilitates a 0.07 % increase in firm value, corresponding to almost $6 million for the mean innovating firm in the U.S. public food and drink industry.

Suggested Citation

  • Grashuis Jasper & Dary Stanley, 2019. "Patented Innovation and Firm Value in the U.S. Food and Drink Industry: The Economic Importance of High-Quality Product Innovation," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 17(2), pages 1-14, November.
    • Handle: RePEc:bpj:bjafio:v:17:y:2019:i:2:p:14:n:2
    DOI: 10.1515/jafio-2017-0002
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    Cited by:

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    2. Jasper Grashuis, 2019. "Spatial Competition in the Iowa Corn Market: Informing the Pricing Behavior of Corporate and Cooperative Grain Merchants," Sustainability, MDPI, vol. 11(4), pages 1-13, February.
    3. Pantelis Sotirelis & Evangelos Grigoroudis, 2021. "Total Quality Management and Innovation: Linkages and Evidence from the Agro-food Industry," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(4), pages 1553-1573, December.

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    More about this item

    Keywords

    firm value; innovation; patent quality; patent citations; food and drink industry;
    All these keywords.

    JEL classification:

    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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