SMEs and patents: Is it worth it? A longitudinal analysis of the patent-performance relationship

In response to scepticism about the benefits of patenting in small firms, this paper provides new evidence on the relationship between financial performance in SMEs and patents, distinguishing between applications and granted patents. Empirical analyses show that firms with a patent application still pending five years after the filing date report higher sales than comparable firms who have not filed. Yet, we also find that the monopoly rights attached to granted patents do not result in higher sales than simply filing for a patent. This analysis leads us to infer that the activities performed during the patent application process improve firm knowledge stocks and absorptive capacity, in turn promoting performance above and beyond the status quo. SME managers should find in this study solid empirical evidence supporting well-informed decision-making over patenting

Innovation, asymmetric information and the capital structure of new firms

Start-ups are essential contributors to economic development, but they often face several barriers to growth, including access to finance. We study their capital structure in their early years of operation through the lens of Pecking Order Theory, exploring how the pursuit of innovation influences firms’ reliance on different types of finance. Panel analyses of 8273 German start-ups show that innovation activities are relevant predict start-ups’ revealed preferences for finance. Effects on the type and order of financing sources depend on the degree of information asymmetries specific to research and development activities, human capital endowments, and the market introduction of new products and processes. New firms focused on research and development activities and with better human capital are less likely to receive informationally complex finance such as debt and will rely relatively more on owner and equity finance. Mixed evidence is found, instead, on the role of new products or processes. Our results suggest that the traditional pecking order theory does not hold for new firms, implying that owner and external equity play a much more prominent role for such firms. Then, managers and entrepreneurs should consider specific sources of finance and financial instruments in light of their innovative activities

Patents and small business risk: longitudinal evidence from the global financial crisis

Purpose The purpose of this study is to shed light on the relationship between patent applications and long-term risk for small firms across the global financial crisis of 2008. During a crisis, firm risk often skyrockets, and small and medium enterprises face significant dangers to their business continuity. However, managers have a set of strategies that could be implemented to increase a firm's resilience, sustaining competitive advantages and improving access to financial resource. The authors focused on the investigating the impact of patenting activities on small business risk in a time of crisis. Design/methodology/approach This is a quantitative study based on a sample of Italian firms that applied for a patent in 2005. The changes in corporate credit ratings over a five-year period are related to different proxies of patent activity using multivariate regression analysis. Findings Firms that filed for a patent were more resilient, compared to the control sample, during the financial crisis. Innovative activities resulting in patent application seem to deliver strategic resources useful to tackle the crisis rather than increase riskiness. The moderating effect of patents on risk sensitivity is stronger for small firms and when the number of patents or the patent intensity is larger. Originality/value Limited evidence is available on how patent applications are related to risks for small firms during an economic crisis. The authors highlight that the innovative efforts resulting in patent applications can support small business resilience. The authors also point out that the implementation of patent information in small firms' credit score modeling is still an uncommon practice, while it is useful in estimating firm risk in a way more robust to exogenous credit shocks

Growth and Financial Dynamics of Innovating Firms: An Empirical Analysis of Italian SMEs

In order to investigate the effect of innovative efforts on firm’s growth and financial dynamics, we examine two samples of Italian SMEs in manufacturing industry; the selection process started searching for the firms that applied for patents in 2005, and selecting 249 ”top innovators” among small and medium enterprises ; then a set of comparable non-innovating firms has been chosen. Our finding shows that innovative activity is not a significant determinant of firm growth and debt level; instead innovating firms turn out to be more profitable than non-innovating

Determinants of environmental social and governance (ESG) performance: A systematic literature review

Understanding the determinants of firms’ ESG performance is not only a key goal of the strategic management f ield, but it is also fundamental for addressing the world’s most pressing environmental and social challenges and guarantee the survival of ESG as well. To date, no comprehensive overview has been carried out of the determinants that have the greatest impact on ESG criteria. In this work, internal and external determinants are identified and analysed, and the potential causes of the discrepancies in research findings are explored. This Systematic Literature Review was developed in accordance with the PRISMA guidelines, whose process led to a content analysis of the results. The current study proves that the discrepancies in literature findings are a direct consequence of the lack of consideration by scholars of the different usage of ESG data providers as well as the variance among countries. Not only does this study represent the first pioneering framework on the topic, but it could also serve as a guidebook for firms wishing to improve their ESG performance

Board of Directors' characteristics and environmental SDGs adoption: an international study

Drivers of environmentally conscious firm behaviour have gained increasing attention over past decades. The Board of Directors holds a central role in corporate decision-making, and previous empirical evidence suggests that its characteristics could influence corporate environmental performance. This paper contributes to the literature with the first evidence of the influence certain board characteristics have on whether a firm ultimately supports one or more environmental SDGs. Our focus is on board size, gender diversity, board independence and CEO duality. Logistic and fractional regressions on 4417 globally listed firms highlight that board size, the share of female directors, and the share of independent directors are significant drivers of support for environmental SDGs. The results and insights revealed in this study should be helpful to policymakers, investors and corporations in evaluating the effectiveness of corporate governance characteristics and fostering corporate contributions to the 2030 Agenda

AI is a viable alternative to high throughput screening: a 318-target study

: High throughput screening (HTS) is routinely used to identify bioactive small molecules. This requires physical compounds, which limits coverage of accessible chemical space. Computational approaches combined with vast on-demand chemical libraries can access far greater chemical space, provided that the predictive accuracy is sufficient to identify useful molecules. Through the largest and most diverse virtual HTS campaign reported to date, comprising 318 individual projects, we demonstrate that our AtomNet® convolutional neural network successfully finds novel hits across every major therapeutic area and protein class. We address historical limitations of computational screening by demonstrating success for target proteins without known binders, high-quality X-ray crystal structures, or manual cherry-picking of compounds. We show that the molecules selected by the AtomNet® model are novel drug-like scaffolds rather than minor modifications to known bioactive compounds. Our empirical results suggest that computational methods can substantially replace HTS as the first step of small-molecule drug discovery

Forsake not an old friend: prior co-investments and the performance of European venture capital syndicates.

Co-investing in a venture capital syndicate with known partners is a common practice that has recently attracted much attention by academic literature. Existing studies explore the relation-ship between prior co-investments and syndicate performance but are exclusively focused on US data. However, the profound differences between US and European venture capital ecosys-tems hint that the results obtained for the former are not necessarily true for the latter. We adopt an agency perspective, proposing that prior ties in European venture capital syndicates are nega-tively correlated to the likelihood of a successful exit. To test our hypothesis, we collect a unique dataset of 922 first-ever syndicated rounds happening in Europe between 2000 and 2009, tracing back co-investments since 1995. Contrarily to what emerges for US firms, we find that prior co-investments are not a significant determinant of successful exits. In addition, we dis-cuss the role of prior ties in determining the time to successful exit, focusing on the multiple agency relationships inside a syndicate and proposing that this relationship is U-shaped. We find significant evidence supporting our hypothesis, with additional prior co-investments reduc-ing the time to exit up to 4.5 average previous co-investments per syndicate member, after which we observe an increase in the time necessary to exit the investment successfully. Our re-sults provide a first investigation on the role of prior ties in European venture capital syndicates and first evidence of the effect of prior ties on the time to exit successful investments. These re-sults can be useful to managers involved in interorganizational collaboration and to policymak-ers that must develop strategies to spur regional venture capital ecosystems

Prior co-investments and exits: a study on European venture capital syndicates

Building on recent developments in the literature, we investigated whether the practice of repeatedly investing with the same partners impacts outcomes for venture capital syndicates. Research shows that European venture capitalists have different attitudes to their American counterparts, which might result in a different ability in benefiting from prior co-investing activities. Hence, we analysed how successful prior collaborations and the concentration of prior ties in an investment syndicate affects the probability of successfully exiting an investment. We also examined the role of prior ties as a determinant of the time to successful exit. From an analysis of 922 first-ever syndicated rounds in Europe between 2000 and 2009, we find that prior ties are not a significant determinant of successful exits. However, prior successful collaborations do play a significant role, as does the concentration of prior ties. We also find that a U-shaped relationship links prior co-investments with the to time to exit. These results should be helpful for managers involved in inter-organisational investment collaborations and to policymakers looking for ways to spur the European venture capital ecosystem