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Patent quality, cumulative innovation and market value: Evidence from Japanese firm level panel data

Author

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  • Nagaoka, Sadao
  • 長岡, 貞男

Abstract

We examine empirically how patent quality in terms of forward citation and science linkage affect the market value of a firm. We find that both indicators affect the market value of a firm significantly even if we extensively control the effects of the other major determinants of the market value, including R&D investment and current return on asset. In addition, the forward citation affects the market value more in cumulative innovation area such as in IT, consistent with a theoretical proposition that the value of having a dependent patent is larger in the industry where innovation is cumulative among firms.

Suggested Citation

  • Nagaoka, Sadao & 長岡, 貞男, 2005. "Patent quality, cumulative innovation and market value: Evidence from Japanese firm level panel data," IIR Working Paper 05-06, Institute of Innovation Research, Hitotsubashi University.
    • Handle: RePEc:hit:iirwps:05-06
    Note: Presented to the Conference on IT Innovation, Tokyo, December 2004.
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/15975/070iirWP05-06.pdf
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    Citations

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    Cited by:

    1. Justus Baron & Henry Delcamp, 2012. "The private and social value of patents in discrete and cumulative innovation," Scientometrics, Springer;Akadémiai Kiadó, vol. 90(2), pages 581-606, February.
    2. Mohd Shadab Danish & Pritam Ranjan & Ruchi Sharma, 2022. "Assessing the Impact of Patent Attributes on the Value of Discrete and Complex Innovations," Papers 2208.07222, arXiv.org.
    3. Fuyuki Yoshikane & Yutaka Suzuki & Keita Tsuji, 2012. "Analysis of the relationship between citation frequency of patents and diversity of their backward citations for Japanese patents," Scientometrics, Springer;Akadémiai Kiadó, vol. 92(3), pages 721-733, September.
    4. Sebastien Lechevalier & Yukio Ikeda & Junichi Nishimura, 2006. "Collaborative R&D in the robot technology in Japan: an inquiry based on patent data analysis (1991-2004)," CIRJE F-Series CIRJE-F-453, CIRJE, Faculty of Economics, University of Tokyo.
    5. Sadao Nagaoka, 2007. "Assessing the R&D Management of a Firm in Terms of Speed and Science Linkage: Evidence from the US Patents," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 129-156, March.
    6. Fukugawa, Nobuya, 2012. "Impacts of intangible assets on the initial public offering of biotechnology startups," Economics Letters, Elsevier, vol. 116(1), pages 83-85.
    7. Cassiman, Bruno & Veugelers, Reinhilde & Zuniga, Pluvia, 2007. "Science linkages and innovation performance: An analysis on CIS-3 firms in Belgium," IESE Research Papers D/671, IESE Business School.

    More about this item

    Keywords

    patent quality; market value; forward citation; science linkage; cumulative innovation;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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