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Reputation Enhancing Through Patent Portfolios: An Exploration of Lapsed Patents and IPOS

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  • Nada Basir

    (University of Waterloo)

Abstract

The path between the patenting of an innovation and the actual commercialization of a new product or technology can be long and costly. Research shows that more than half of issued patents lapse before the end of their term due to missed maintenance fees. Since patents can help overcome the liabilities of newness faced by new ventures by reducing information asymmetries, pre-IPO firms may apply for patents as they near their IPO date as a reputation-enhancing strategy. Once a firm IPOs, it may no longer require the patent, thus letting it lapse. Drawing on the reputation literature and signaling theory, this study investigates whether there is a relationship between lapsed patents and a firm’s IPO date. The results suggest that as a company gets closer to its IPO date, the more likely it is to increase its patenting activity, but the more likely it is for these patents to lapse.

Suggested Citation

  • Nada Basir, 2020. "Reputation Enhancing Through Patent Portfolios: An Exploration of Lapsed Patents and IPOS," Corporate Reputation Review, Palgrave Macmillan, vol. 23(1), pages 42-56, February.
    • Handle: RePEc:pal:crepre:v:23:y:2020:i:1:d:10.1057_s41299-019-00074-0
    DOI: 10.1057/s41299-019-00074-0
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