Do IT Patents Matter for Firm Value? The Role of Innovation Orientation and Environmental Uncertainty

IT industry has become patent-intensive due to the rapid advances in technology and the fierce competition among firms. While prior studies indicate financial returns from investments in IT patents are unclear, recent patent wars in IT industry suggest that IT patents may be of great value. We examine the impact of IT patents as an intangible IT resource on firm value in IT industry, while also considering the moderating effect of firms’ innovation orientation (exploitative vs. explorative). Moreover, we examine how environmental uncertainty influences the relationship between firms’ IT patents, innovation orientation, and performance. Our results suggest that the impact of IT patents on firm value is positive and significant. More importantly, we find that this impact varies depending on firms’ innovation orientation. Further, we find that the moderating effect of innovation orientation is influenced significantly by the two dimensions of environmental uncertainty (i.e., competitiveness and dynamism)

Competitive Impacts of IT Innovation: An Empirical Analysis of Software Patents in the IT Industry

We investigate the impact of a firm’s software patents on rivals’ market value using data from the US IT industries. Theoretically, there are two countervailing forces influencing the competitive impact of software patents: market-stealing and spillover. Therefore, the net impact of a firm’s software patents on rivals depends on the relative magnitude of these two forces, and is essentially an empirical question. We find that a focal firm’s software patent stock is negatively associated with its rivals’ market value. In addition, we find interesting moderating effects of two factors: hardware patent stock and competitive intensity. Our results indicate that the focal firm’s hardware patent stock amplifies the negative impact of its software patent stock on rivals’ market value. Furthermore, we find that the competitive intensity of the industry mitigates the competitive impact of software patent stock