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Patents and the financial performance of firms - An analysis based on stock market data

Author

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  • Neuhäusler, Peter
  • Frietsch, Rainer
  • Schubert, Torben
  • Blind, Knut

Abstract

The following article systematically analyzes the question of how the results of R&D and its protection - or so to say, the technology base of a firm - can influence its market value and profits. Based on theoretical arguments it is hypothesized that large and highly valuable patent portfolios of firms have significant effects on their competitiveness in the long run. For the empirical testing a panel dataset including 479 firms from 1990 to 2007 based on the DTI-Scoreboard is used, which contains data on R&D expenditures, market capitalization, turnover etc. and structural information like firm-size and industry sector. To this database the relevant information on patenting behavior and financial performance are added, so effects of firm characteristics can be calculated. To assess the value of a firm's patent portfolio, different value measures like the number of received patent citations, opposed patents, number of inventors etc. are being applied. The results suggest that at least at the firm level, especially forward citations and family size positively influence market value. Concerning the Return on Investment, especially oppositions and family size show positive effects. This leads to the conclusion that securing international markets has a positive effect on the value of the firm in the home market.

Suggested Citation

  • Neuhäusler, Peter & Frietsch, Rainer & Schubert, Torben & Blind, Knut, 2011. "Patents and the financial performance of firms - An analysis based on stock market data," Discussion Papers "Innovation Systems and Policy Analysis" 28, Fraunhofer Institute for Systems and Innovation Research (ISI).
    • Handle: RePEc:zbw:fisidp:28
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    Citations

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    Cited by:

    1. Frietsch, Rainer & Neuhäusler, Peter & Rothengatter, Oliver, 2012. "Patent Applications – Structures, Trends and Recent Developments," Studien zum deutschen Innovationssystem 8-2012, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    2. de Rassenfosse, Gaétan, 2013. "Do firms face a trade-off between the quantity and the quality of their inventions?," Research Policy, Elsevier, vol. 42(5), pages 1072-1079.
    3. Damioli, Giacomo & Van Roy, Vincent & Vertesy, Daniel & Vivarelli, Marco, 2021. "May AI Revolution Be Labour-Friendly? Some Micro Evidence from the Supply Side," IZA Discussion Papers 14309, Institute of Labor Economics (IZA).
    4. Jurriën Bakker & Dennis Verhoeven & Lin Zhang & Bart Van Looy, 2016. "Patent citation indicators: One size fits all?," Scientometrics, Springer;Akadémiai Kiadó, vol. 106(1), pages 187-211, January.
    5. Giacomo Damioli & Vincent Van Roy & Daniel Vertesy & Marco Vivarelli, 2021. "Detecting the labour-friendly nature of AI product innovation," DISCE - Quaderni del Dipartimento di Politica Economica dipe0017, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    6. Katarzyna Prędkiewicz & Paweł Prędkiewicz, 2014. "The Patents and Financial Performance of Firms - Evidence From Polish Manufacturing Companies," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 10(4), pages 115-141.
    7. Damioli, Giacomo & Van Roy, Vincent & Vertesy, Daniel & Vivarelli, Marco, 2021. "Will the AI revolution be labour-friendly? Some micro evidence from the supply side," MERIT Working Papers 2021-016, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    8. Kao-Yi Shen & Min-Ren Yan & Gwo-Hshiung Tzeng, 2017. "Exploring R&D Influences on Financial Performance for Business Sustainability Considering Dual Profitability Objectives," Sustainability, MDPI, vol. 9(11), pages 1-21, October.
    9. Peter Neuhäusler & Rainer Frietsch, 2013. "Patent families as macro level patent value indicators: applying weights to account for market differences," Scientometrics, Springer;Akadémiai Kiadó, vol. 96(1), pages 27-49, July.
    10. Frietsch, Rainer & Neuhäusler, Peter & Michels, Carolin & Dornbusch, Friedrich, 2014. "Medical research at universities – An international comparison," Studien zum deutschen Innovationssystem 8-2014, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    11. Giacomo Damioli & Vincent Van Roy & Daniel Vertesy, 2021. "The impact of artificial intelligence on labor productivity," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 11(1), pages 1-25, March.

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