the value of patented inventions at the extensive and intensive margin
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The Value of Patented Inventions at the Extensive and Intensive Margin. Alfonso Gambardella Joint with Dietmar Harhoff , LMU, Munich Bart Verspagen , Maastricht University, Maastricht . KITeS Conference: New Frontiers in the Economics and Management of Innovation - PowerPoint PPT PresentationTRANSCRIPT
The Value of Patented Inventions at the Extensive and Intensive Margin
KITeS Conference: New Frontiers in the Economics and Management of Innovation
Bocconi University, 22-23 March 2012
Alfonso GambardellaJoint with
Dietmar Harhoff, LMU, MunichBart Verspagen, Maastricht University, Maastricht
What determines the economic value of inventions?
· Value of innovations depends to a good extent on downstream development, production and commercialization (Rosenberg, Teece)
· But what about upstream?
· Question is important· Markets for technology· Firms want to understand value created by their labs
· We focus on patents· Closer to inventions than fully developed, manufactured,
commercialized products· Value of patents interesting per sé
· Inventions cannot be examined in isolations
· We study the determinants of the value of a portfolio of related inventions· “patents related in technical ways or in value”
)(NVNV
Value of patent portfolio V increases because of N or ?V
Determinants of N vs. ?V
We focus onResources invested in producing the invention (man-
months)Inventor characteristics (past citations, education)
),(),,(
ZMNNZMNVNV
DefinitionExtensive margin = % in V due to 1% in N given
M
Intensive margin = % in V due to 1% in M given N
Intensive mgExtensive
mg+ complementarity– substitutionEcon of scope in
knowl.
Plan
· Some theory to guide our empirical analysis
· Data
· Empirical results
Theory (1 of 4)
· Research sequence
Ideas Signal about potential value of ideas
Patent a subset of ideas (signal > threshold)(inventions)
Commercialize a subset of patented inventions (innovations)
Theory (2 of 4)
1 2 3
Expected values
Projects
H1 H3H2
1. Screening of expected outcomes
Better screeningH1
H2
H3
threshold(exp costs)
2 projects3 projects
Poorer ability to screen makes the extensive margin relatively more important than the intensive margin
Theory (3 of 4)
1 2 3
Expected values
Projects
2. Spread around expected value
E(V | above thr.) … like worst screening
H1
H2
H3 threshold(if below, you know you won’t comm. patent)
2 projects3 projects
5
8
12 (50%)
4 (50%)
6 (50%)
2 (50%)
4
H1: 8 – 5 = 3 … H2: 0 (because 4 – 5 < 0) H1: (12 – 5)*0.5 + 0*0.5 = 3.5 … H2 (6 – 5)*0.5 + 0*0.5 = 0.5 … launch H2 as well
More precise information about expected value fewer patents in the portfolio
Theory (4 of 4)
· (N V) relative to (M V) : screening (extensive vs intensive margin)
· Science N : precision of info (lower N)· Science M : more ideas (higher N)· Science V : net effect· Two models (which one dominates?)
· scientific (low N, high M)· empiricist (high N, low M)
),(),,(
ZMNNZMNVV
Patent Portfolio – Data (PatVal-EU)
· Population: all EPO patents with priority date 1993-1997· France (FR), Germany (DE), Italy (IT), Netherlands (NL),
Spain (ES), UK (GB) – later addition: Danmark (DK) and Hungary (HU)
· questionnaire sent to first inventor (if not available: any other inventor)
· questions on inventor biography, employer, invention process, invention characteristics
· 27,000 questionnaires mailed, about 9,000 responses (17.9% UK, 40.2% DE, 13.8% IT, 1.7% ES, 12.9% FR, 13.3% NL)
· For details: Giuri, Mariani et al. (2007) “Inventors and invention processes in Europe: Results from the PatVal-EU survey”, Research Policy, 36 (8), 1107-1127
Patent Portfolio – Data (N)
· Define portfolio: “group of patents related technically or in value”
· Survey question (to the inventor of the focal patent):· “How many patents in this portfolio”?
· Menu: 1; 2; 3-5; 6-10; 11-20; > 20
Patent Portfolio – Data (Value)· Survey question:
· “Suppose that on the day at which this patent was granted, the applicant had all the information about the value of the patent that is available today. In case a potential competitor of the applicant was interested in buying the patent, what would be the minimum price (in Euro) the applicant should demand?“
· We offer a menu of 10 value intervals: < 30K€; 30-100k€; …; to > 300M€
· Ask same question about portfolio· More intervals: 300M-1B; 1-3B; >3B
33
72
88
75
42
25
107
1 1
42
71
90
74
41
23
74
1 10
10
20
30
40
50
60
70
80
90
100
< 30K 30-100K
100-300K
300-1M 1-3M 3-10M 10-30M 30-100M
100-300M
> 300M
Value Classes (354 observations)
Freq
uenc
ies
Inventors
Managers
Patent Portfolio: Inventors vs Managers
GMM results
Many controls (including strategic patenting for N), 4638 obs., N, M endogenous
Conclusions
· In the invention process the extensive margin is important · Resources· Inventor’s experience (past successes, education)
· Can (almost) compensate the lack of science
· Importance of N when screening is hard … early entrepreneurship?
· You have to leave with unused ideas … or failed start-ups
Thank You!www.alfonsogambardella.it
Robustness check 1
Robustness check 2