Entry and Patenting in the Software Industry

To what extent are firms kept out of a market by patents covering related technologies? Do patents held by potential entrants make it easier to enter markets? We estimate the empirical relationship between market entry and patents for 27 narrowly defined categories of software products during the period 1990-2004. Controlling for demand, market structure, average patent quality, and other factors, we find that a 10% increase in the number of patents relevant to market reduces the rate of entry by 3-8%, and this relationship intensified following expansions in the patentability of software in the mid-1990s. However, potential entrants with patent applications relevant to a market are more likely to enter it. Finally, patents appear to substitute for complementary assets in the entry process, as patents have both greater entry-deterring and entry-promoting effects for firms without prior experience in other markets.

Patent thickets, licensing and innovative performance

We examine the relationship between fragmented intellectual property (IP) rights and the innovative performance of firms, taking into consideration the role played by in-licensing of IP. We find that firms facing more fragmented IP landscapes have a higher probability of in-licensing. For firms with small patent portfolios we also find a positive association between fragmentation and licensing costs as a share of sales. We observe a negative relationship between IP fragmentation and innovative performance, but only for firms that engage in in-licensing. In contrast, greater IP fragmentation is associated with higher innovative performance for firms that do not in-license. Furthermore, the effects of fragmentation on innovation also appear to depend on the size of a firm’s patent portfolio. These results suggest that the effects of fragmentation of upstream IP rights are not uniform, and instead vary according to the characteristics of the downstream firm. --patent thickets,licensing,innovative performance

How Important is U.S. Location for Research in Science?

Atlanta Conference on Science and Innovation Policy 2009This presentation was part of the session : Science and Innovation WorkforceThe United States has the largest concentration of cutting-edge research scientists in the world, attracts more foreign graduate students than any other country, and is home to a disproportionate share of top scientists (Zucker and Darby 2007, Bound, Turner and Walsh 2006). If, as many papers suggest, knowledge diffusion and collaboration are enhanced by geographic proximity, then these facts alone will mean that the productivity of U.S.-based scientists will be elevated relative to those in other countries. Adding to this advantage is the ability of well-funded American universities and research institutes to devote considerable financial resources to increasingly expensive research laboratories and equipment. There are several countervailing forces that might erase the advantages enjoyed by U.S. researchers. Other countries are attracting more star scientists. Other governments are making the development of stronger research capabilities a national priority, while the U.S. government has made some controversial policy choices that may have deterred some scientific explorations. At the same time, advances in communications technology and reductions in the cost of international travel have reduced geographic barriers to knowledge diffusion and to long-distance collaboration in science. This paper asks whether scientists who received U.S. doctorates but located outside the U.S. have in recent years been at a disadvantage when it comes to research productivity, collaboration, and knowledge diffusion. A first look at the data from our sample of 446 foreigners who received U.S. science Ph.D.'s during the 1990's and early 2000's summarized in Figures 1 and 2 suggests the answer to this question is a resounding yes. Compared to those located outside the U.S., the U.S.-located U.S.-educated foreign Ph.D. scientists in our sample produce more knowledge each year, as measured by their average journal publications, and this knowledge is diffused more broadly, as measured by forward (i.e. later) citations to these articles. Furthermore, U.S.-educated Ph.D. scientists located abroad conduct research that is less likely to draw on the most recent scientific advances. However, comparisons of scientists inside the U.S. with those outside are plagued by unobserved heterogeneity among scientists and endogeneity of their location choices. Those scientists located in the U.S. and those outside are likely to differ widely in their inherent research ability and proclivity. Better researchers may be more likely to receive U.S. job offer. and/or those most interested in research may be more likely to remain in the U.S. This paper makes use of a new dataset that follows the post-Ph.D. careers of foreign scientists who came to the U.S. for their doctorate. It is unique in being the only data set of which we are aware that tracks the career progression of individual U.S.-trained Ph.D. scientists, whether they leave the U.S. or not.[2] Our sample has been carefully crafted to exploit exogenous variation in post-Ph.D. location induced by visa status. It does this by comparing foreign-born Ph.D. recipients who were required by law to leave the U.S. upon the completion of their studies with similar Ph.D. recipients who were allowed to remain in the U.S. We examine their research output in terms of the number and prestige of publications and the individuals' contribution to these publications as measured by first and last authorship. We measure these publications' impact on science by their number of forward citations, the scientists' connection to cutting-edge science by the median lag of publications' backward citations (i.e. articles cited in the publication), and their links to the American scientific community by co-authorship with Ph.D. advisors and others in the U.S. In all regressions, we control for scientists' pre-graduation research output, which we believe to be a good proxy for inherent research potential. Instrumenting for location using visa status and allowing richer and poorer countries to have different impacts, we find that the negative relationship between non-U.S. location and research output is present and large for poorer countries but completely eliminated when the researcher is located in a richer country, with two exceptions. Even for those located in the richest countries, foreign location negatively impacts both last authorship and collaboration with Americans. Further, allowing for heterogeneity in the treatment effect of foreign location on research output on these same countries, we find that the negative effect on publications of being abroad is largest for those with the lowest estimated propensity of being abroad, those who -- given their observable characteristics -- would be expected to remain in the US. [1] This research is supported by the National Science Foundation. [2] One can obtain information on foreign-born scienstists who remain in the U.S. from the NSF's SESTAT database. Also, Michael G. Finn's research provides valuable information on the stay rates of Ph.D.s. of foreign origin.National Science Foundatio

Patent thickets, licensing and innovative performance

We examine the relationship between fragmented intellectual property (IP) rights and the innovative performance of firms, taking into consideration the role played by in-licensing of IP. We find that firms facing more fragmented IP landscapes have a higher probability of in-licensing. We observe a negative relationship between IP fragmentation and innovative performance, but only for firms that engage in in-licensing. In contrast, greater IP fragmentation is associated with higher innovative performance for firms that do not in-license. Furthermore, the effects of fragmentation on innovation also appear to depend on the size of a firm's patent portfolio. These results suggest that the effects of fragmentation of upstream IP rights are not uniform, and instead vary according to the characteristics of the downstream firm. Copyright 2010 The Author 2010. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Entry and Patenting in the Software Industry

To what extent are firms kept out of a market by patents covering related technologies? Do patents held by potential entrants make it easier to enter markets? We estimate the empirical relationship between market entry and patents for 27 narrowly defined categories of software products during the period 1990-2004. Controlling for demand, market structure, average patent quality, and other factors, we find that a 10% increase in the number of patents relevant to market reduces the rate of entry by 3%-8%, and this relationship intensified following expansions in the patentability of software in the mid-1990s. However, potential entrants with patent applications relevant to a market are more likely to enter it. Finally, patents appear to substitute for complementary assets in the entry process, because patents have both greater entry-deterring and entry-promoting effects for firms without prior experience in other markets. This paper was accepted by Bruno Cassiman, business strategy.innovation, intellectual property rights, software patents, entry