Text matching to measure patent similarity

Research Summary : We propose using text matching to measure the technological similarity between patents. Technology experts from different fields validate the new similarity measure and its improvement on measures based on the United States Patent Classification System, and identify its limitations. As an application, we replicate prior findings on the localization of knowledge spillovers by constructing a case–control group of text‐matched patents. We also provide open access to the code and data to calculate the similarity between any two utility patents granted by the United States Patent and Trademark Office between 1976 and 2013, or between any two patent portfolios. Managerial Summary : We propose using text matching to measure the technological similarity between patents. The method can be used by various practitioners such as inventors, attorneys, patent examiners, and managers to search for closely related prior art, to assess the novelty of a patent, to identify R&D opportunities in less crowded areas, to detect in‐ or out‐licensing opportunities, to map companies in technology space, and to find acquisition targets. We use an expert panel to validate the improvement of the new similarity measure on measures based on the United States Patent Classification System, and provide open access to the code and data to calculate the similarity between any two utility patents granted by the USPTO between 1976 and 2013, or between any two patent portfolios.     

The quest for expansive intellectual property rights and the failure to disclose known relevant prior art

Expansive patent portfolios may be used by firms to fence off technological space for commercialization, impede the commercialization efforts of competitors, and enhance bargaining power in cross‐licensing negotiations. Low quality patents with claims that overlap those of other patents contribute to these portfolios and patent strategies. By failing to disclose known relevant prior art during the patenting process, inventors and their firms may be granted low quality patents with intellectual property claims which would not otherwise have been granted. We find that the failure of inventors to disclose known relevant prior art increases as they gain experience with the patenting process. Such failure is also greater among inventors employed by relatively small, poorly performing firms that rely on outsourced legal counsel during the application process. Copyright © 2014 John Wiley & Sons, Ltd.     

Patent management in entrepreneurial SMEs: a literature review and an empirical study of innovation appropriation,patent propensity,and motives

Managers make a number of strategic choices when trying to capture returns from innovation investments, including what appropriation strategy to use and whether or not to patent, strategic choices that depend among other things on firm size. Previous literature, being reviewed in this paper, shows that the patent propensity is lower in small and medium‐sized enterprises (SMEs) than in large firms and that patenting as means for appropriation is of less importance among SMEs. Chief executive officers (CEOs) and/or research and development (R&D) managers of 26 entrepreneurial SMEs have been interviewed to explain these differences and to provide insight on how patenting is used in SMEs. The patent competence was low among the studied SMEs, and internal patent resources were found to be important for effective and efficient use of the patent system, for application as well as monitoring and enforcement. While of limited perceived importance for protecting inventions in entrepreneurial SMEs, patents were used to attract customers and venture capital, which is of utmost importance for the survival and growth of these firms. Thus, patenting has an important role to play even in firms where the protective function of patents is secondary.     

THE DETERMINANTS OF INTERNATIONAL PATENTING FOR NINE AGRICULTURAL BIOTECHNOLOGY FIRMS*

This paper examines international patent application decisions of nine agricultural biotechnology firms from 1990–2000 in Australia, Brazil, Canada, China, the European Patent Office, Japan and South Africa. The data reveal a low frequency of international applications despite an initial United States' application, indicating very low values for patents abroad. The results indicate that invention quality plays an important role in firms' decisions to patent abroad and that a single international application is a good predictor of multiple international applications. Further, significant country fixed effects suggest wide differences in business climates and patent enforcement among countries.     

Patent office in innovation policy: Nobody's perfect

The number of patent applications and “bad” patents issued has been rising rapidly in recent years. Based on this trend, we study the overload problem within the Patent Office and its consequences on the firms' R&D incentives. We assume that the examination process of patent applications is imperfect, and that its quality is poorer under congestion. Depending on policy instruments such as submission fees and the toughness of the non-obviousness requirement, the system may result in a high-R&D equilibrium, in which firms self-select in their patent applications, or in an equilibrium with low R&D, opportunistic patent applications and the issuance of bad patents. Multiple equilibria often co-exist, which deeply undermines the effectiveness of policy instruments. We investigate the robustness of our conclusions as to how the value of patent protection is formalized, taking into consideration the introduction of a penalty system for rejected patent applications, as well as the role of commitment to a given patent protection policy.     

Entrepreneurial Orientation and Firm Performance: Drawing Attention to the Senior Team

Prior studies have argued entrepreneurial orientation (EO) plays an important role in explaining firm performance. This study aims to assess how senior team attributes moderate the relationship between EO and firm performance. For this purpose, an attention‐based perspective is adopted, focusing on attention scope as well as distributed and situated attention. By considering the role of senior team heterogeneity in broadening the attention scope of senior teams and the role of senior team shared vision in aligning distributed attention across organizational functions, this research investigates how senior teams may enhance the value‐creating potential of EO. In addition, we assess situated attention by including the notion of environmental dynamism and examining whether the role of the senior team attributes is contingent upon environmental conditions. Using a time‐lagged sample of 346 firms operating in various industries, we find that senior team heterogeneity helps firms to leverage their EO and improve their performance. Moreover, once environmental conditions are taken into account, results indicate that the absence of heterogeneity at senior team level may be particularly detrimental for firms operating in stable environments. The direct moderating effect of shared vision on the relationship between EO and performance is not substantiated. However, senior team shared vision has a positive impact for firms operating in dynamic environments, providing a premium for firms aiming to realize the inherent value of EO. Our research provides important implications for senior teams aiming to leverage their EO into increased firm performance. Evidence shows that while a heterogeneous team composition and senior team shared vision may provide several benefits, these advantages may fluctuate across environmental conditions.     

Stepping across for social approval: Ties to independent foundations' boards after financial restatement

Research Summary: Integrating research on independent philanthropy and organizational misconduct, we argue that affiliations with independent foundations provide social approval benefits for firms that restate their financials. We use a panel of S&P 500 companies from 2004 to 2011 to investigate the addition of foundation board ties by restating firms. CEOs of restating firms add more new foundation board ties than CEOs of non‐restating firms, while existing corporate philanthropy and greater corporate reputation diminish this effect. We also find that new ties to foundations boards influences media tenor for restating firms more than it does for non‐restating peers. Our study offers a nuanced analysis of the post‐crisis actions of restating firms relative to non‐restating peers and highlights the relevance of ties to nonprofit boards for corporate governance. Managerial Summary: Firms oftentimes fire their top executives in the aftermath of misconduct, but such response is itself disruptive for the firm's operations. Instead, we suggest that forging ties to independent foundations can help firms in such contexts without unsettling effects. Our results show that, after a restatement event, CEOs of misconduct firms are especially likely to join new foundation boards as trustees and thus seem to be aware of the benefits of these associations. CEOs from firms with existing in‐house philanthropy or a high reputation do not join as many new foundations' boards of trustees. We also find that new firm‐foundation links are promptly and positively evaluated by the media, thus helping misconduct firms regain social approval.     

When do strategic alliances inhibit innovation by firms? Evidence from patent pools in the global optical disc industry

Research and development (R&D) consortia are specialized strategic alliances that shape the direction and scope of firm innovation activities. Little research exists on the performance consequences of participating in R&D consortia. We study the effect of patent pools, a unique form of R&D consortia, on firm performance in innovation. While prior research on alliances generally implies that patent pools enhance firm innovation, our study finds the opposite. Analyzing data on systemic innovation in the global optical disc industry, we find that patent pool formation substantially and significantly decreases both the quantity and quality of patents subsequently generated by licensors and licensees relative to the patenting activity of nonparticipants. Our empirical findings suggest that patent pools actually inhibit, rather than enhance, systemic innovation by participating firms. Copyright © 2011 John Wiley & Sons, Ltd.     

Shared and shared alike? Founders' prior shared experience and performance of newly founded banks

Research summary: Pre‐entry industry experience is a central construct in the founding team literature. Research on prior shared experience (PSE) emphasizes that founding teams face challenges integrating and acting on independent experiences, so PSE should be beneficial for new venture performance. Existing studies, however, typically study PSE in blunt terms, expecting that more is better. Instrumental variable analyses of a unique sample of 344 commercial banks founded in four U.S. states between 1996 and 2006 showed that industry‐specific PSE may be more or less beneficial, depending on several founding team characteristics. Our findings provide nuance and caution to the narrative that PSE is always beneficial. Under some circumstances, firms with founding team PSE may be no better off than those without founding team PSE, suggesting more research is necessary to understand when and why founding team experience matters to new firms. Managerial summary: Pre‐entry experience of founding teams affects new firm performance, but is hard for founders to leverage separately gained experience. Knowledge moves more readily if sets of managers leave together to start a new firm. But, it may be simplistic to conclude that prior shared experience (PSE) is always good, or better than the sum of independent experiences. In a set of banks founded in four U.S. states between 1996 and 2006, we find that PSE is not necessarily a direct pathway to better bank performance. Characteristics of the PSE, such as the part of industry the former and new banks operate in, can lower its benefit. We also found that the benefits of PSE erode as the entire founding team develops shared history after startup. Our findings have implications for entrepreneurs, investors, and policy‐makers. Copyright © 2015 John Wiley & Sons, Ltd.     

How many patents does it take to signal innovation quality?

In this paper, we offer a novel explanation to the surge in patenting observed during the last few years. When PTOs (Patent and Trademark Offices) award bad patents, not only do “false innovators” have the incentive to file applications but also, and more interestingly, “true innovators” are forced to patent more intensively in an attempt to signal their type. However, if they are liquidity constrained, true innovators may fail to separate and this fact reduces the incentives to exert effort in R&D. In addition, drawing on the signaling role of patents highlighted by the model, we investigate some of the proposals that have been put forward in order to mitigate the bad patent problem. We provide an intuitive condition under which a tightening of the patentability standards (“raising the bar”) reduces the distortions caused by bad patents. Moreover, we show that introducing a two-tiered patent system is unlikely to improve market outcomes.     

Antecedents and consequences of team sensemaking capability in product development projects

With the increasing popularity of organizational sensemaking in the literature, sensemaking capability of firms attracts many researchers and practitioners from different fields. Nevertheless, sensemaking capability is rarely addressed in the new product development (NPD) project teams in the technology and innovation management literature. Specifically, we know little about what team sensemaking capability is, its ingredients and benefits, and how it works in NPD projects (e.g., its antecedents and consequences). By investigating 92 NPD project teams, we found that (1) team sensemaking capability, which is composed of internal and external communication, information gathering, information classification, building shared mental models, and taking experimental actions, has a positive impact on the information implementation and speed‐to‐market; (2) information implementation and speed‐to‐market mediate the relationship between team sensemaking capability and new product success; and (3) team sensemaking capability mediates the relationship between team processes and information implementation and partially mediates the relationship between team processes and speed‐to‐market. We also found that team autonomy, interpersonal trust among team members, and open‐mindedness of team members positively influence the development of team sensemaking capability. Theoretical and managerial implications of the study findings are discussed.     

Inventor bricolage and firm technology research and development

We examine the conditions around firm use of 'inventor bricolage,' or the reconstruction of technological capabilities through reallocation of extant individual inventors to address new opportunities embodied in patents. Empirically, we examine the dynamics of both firm and individual patenting activity in publicly traded Life Science Diagnostic firms to explore how inventor bricolage is related to firms' existing research and development (R&D) capabilities and firms' acquisition of external capabilities through merger and acquisition (M&A) activities. Evidence at the firm level suggests that breadth of inventors' human capital and collaboration with co-researchers with relevant experience is positively related to inventor bricolage. At the inventor level, the fewer patents an inventor has, the broader the individual's prior patent portfolio, and the more co-researchers with relevant experience, the more likely inventors will patent in a new area. M&A does not appear to have an impact on the utilization of existing human capital. Our findings suggest that R&D managers should assign inventors with less assimilative capacity and more creative capacity in teams where there is relevant experience in order to promote inventor bricolage.     

On the effects of authority on peer motivation: Learning from Wikipedia

Research Summary: We investigate the conditions under which authority can be deployed without reducing subordinate motivation. We show that lateral authority, the legitimacy to resolve task‐specific problems, is welcomed by members of an organization in the resolution of coordination conflicts, the more so (a) the fiercer the conflict to be resolved, (b) the higher the competence‐based status of the authority, (c) the lower the tenure of, and (d) the more focused the organizational members are. Analyzing the discussion behavior of members of Wikipedia between 2002 and 2014, we corroborate our allegations empirically by analyzing 642,916 article–discussion pages. Our findings, obtained for a modern collective production community, provide learning opportunities for how traditional organizations may want to govern activities of their idiosyncratically motivated staff. Managerial Summary: When managers use their (legitimate) power to take decisions on behalf of their staff, they risk setting back employees and making them detach from the firm. This danger is particularly salient whenever highly motivated teams of staff autonomously work on corporate problems and are used to governing themselves. Examples range from skunkwork initiatives within traditional firms to entire team‐based organizations, such as Valve or Zappos. When and how managers can add value by resolving conflicts within and across these teams once their self‐organization fails is what we study in this article. Inspired by data from Wikipedia, we suggest that managers should not intervene prematurely, benefit from visible competence, and are respected most for their actions by specialized peers who recently joined the organization.     

Holdup,Knowledge Transferability,and Productivity: Theory and Evidence from Knowledge Workers*

This article studies how firing costs affect the productivity of knowledge workers. We develop a holdup model in which workers are essential to knowledge transfer between firms and show that if the worker's knowledge stock is sufficiently transferable to competing firms, an increase in firing costs inhibits the firm's ability to hold up the worker and thereby leads to higher effort. We consider the passage of the wrongful discharge laws in the US as an exogenous increase in firing costs and test our theory using data on patents filed at the United States Patent and Trademark Office (USPTO).     

When do family firms have an advantage in transitioning economies? Toward a dynamic institution‐based view

We advance a dynamic institution‐based view of the firm that extends the theory's current focus on scope of pro‐market reforms (degree of market liberalization in a given year) to consider how speed of reforms (rate of market liberalization achieved over time) affects the performance of firms from transitioning economies. Utilizing a sample of public firms from Chinese provinces with varying reform speeds, we find that while scope of reforms positively impacts firm performance, speed of reforms detracts from firm performance. We further find that while family firms have an advantage in gradually reforming provinces, non‐family firms have an advantage in rapidly reforming provinces. Thus, we extend the institution‐based view across time (speed of reforms) and firms (family vs. non‐family firms). Copyright © 2014 John Wiley & Sons, Ltd.     

Rookies and seasoned recruits: How experience in different levels,firms, and industries shapes strategic renewal in top management

Research summary : This study explores the effect of knowledge integration on strategic renewal. In particular, it examines how executives from different levels and sources influence renewal when added to top management teams (TMT). In contrast to prior work, the study hypothesizes and finds that new outside rookies—those new to top management and the firm—are associated with higher firm growth than other types of executives. We also find that seasoned outsiders—those with prior TMT experience outside the focal industry—contribute to growth only when the existing TMT has a long tenure. The results suggest that the ability of the TMT to integrate new members varies by executive type and has an important effect on incremental strategic renewal. Managerial summary : Conventional wisdom holds that firms are better off hiring those who can demonstrate prior experience and skill in tasks as close as possible to the job. In the realm of the top management team (TMT), however, we find that many firms benefit from hiring rookies from other firms who are new to the top management team level. These candidates bring useful knowledge of the operations of competitors and other firms, and they are easier to socialize and integrate with the existing team. While more experienced senior leaders may bring valuable strategic knowledge, this study suggests that only top management teams with long shared experience can weather the disruption that they cause to realize the potential benefits. Copyright © 2016 John Wiley & Sons, Ltd.     

A multilevel investigation of factors influencing creativity in NPD teams

Understanding creativity in the context of a new product development (NPD) team is of paramount importance, especially in the high-technology industry where creativity is a key resource. Building on the mood-as-input model, this study examines how contextual factors (organizational support and organizational control) moderate the relationship between team affective tone and team creativity. The data collected comprise 343 sets of responses involving 106 NPD teams drawn from high-technology firms. The results of this study show that negative affective tone relates positively to team creativity when organizational support is high and organizational control is low, but the linkage between positive affective tone and team creativity as moderated by context factors is found to be insignificant. This article likewise includes research limitations, future research directions, and theoretical and managerial implications.     

Cross-Functional Teams: Good Concept, Poor Implementation!

Since the late 1970s there has been a substantial increase in the use of teams in the product development process. However, even as more manufacturing firms are initiating the use of teams, their value is being questioned by firms that have used teams for years. Based on interviews in dozens of U.S. firms, John Henke, Richard Krachenberg, and Thomas Lyons suggest that most firms are not using teams as effectively and efficiently as they could and should be. In an attempt to overcome this shortcoming, the article discusses the system's characteristics and organizational implications of the multifunctional product development team, including the benefits linked to the use of teams; the current state of team design, and where improvements can be made; and team–people issues, including communications, decision-making processes, and leadership styles. Specific suggestions on what must be done to improve team effectiveness are also discussed. Finally and most importantly, the article discusses what firms are doing, often inadvertently, to discourage the future use of teams and how these activities can be overcome to maintain the continued viability of teams over the long run.     

Firm Patenting,Innovations, and Government Institutional Support as a Double‐Edged Sword

In 2012, China was ranked fourth in patent filing by region of origin. However, firm innovation quality is not comparable to such quantity. Evidence of this is that no Chinese organization was named as a Thomson Reuters 2011 or 2012 Top 100 Global Innovators. This paradox of firm patenting and innovations in China challenges the traditional understanding of the role of government in industrial innovation. This paper provides a theoretical lens through which to examine traditional protective and strategic patenting motives. Based on institutional theory and the ultimate goals of patenting motives, the paper posits that protective patenting motives are directly law‐based while strategic patenting motives are largely law‐derived. The paper also aims to empirically examine three questions: (1) What is the relative importance of various patenting motives to firm patenting behaviors? (2) What effects do patenting behaviors have on firm product and process innovations? (3) How, if at all, does governmental institutional support affect firm patenting and innovations? This paper uses dominant analysis, structural equation modeling, and regression analysis to analyze the survey data collected from a sample of 270 firms in China. The empirical results provide new evidence about firm patenting, innovations, and government institutional support. First, the order of relative importance of patenting motives to patenting behaviors was found to be (in the descending order of importance) reputation, exchange, blocking, and protection. Second, patenting behaviors were more relevant to product innovations than to process innovations. Third, more importantly, while government institutional support can enhance the effects of protective patenting motives on patenting behaviors, it can mitigate the effects of strategic patenting motives on patenting behaviors. Moreover, government institutional support reduces the positive effect of patenting behaviors on product innovations. These findings suggest that firm patenting and innovations are distinct activities, and that government institutional support acts as a double‐edged sword in firm patenting and innovations: On the one hand government institutional support—an extralegal formal institution—may work alongside the patent system—a law‐based formal institution—to advance science and technology, but on the other hand government institutional support may distract firms from commercializing patented knowledge into new products. This paper primarily contributes to institutional theory, new product development literature, and innovation management practice by revealing the dynamics between two different types of formal institutions—patent system and government institutional support—by establishing an institution‐based view of patenting motives, by empirically distinguishing firm patenting and innovations, and more interestingly by uncovering a double‐edged role of government institutional support in firm patenting and innovations.     

Management heterogeneity,competitive interaction groups,and firm performance

One of the fundamental problems in strategic management is to map a heterogeneous set of firms in an industry into subsets of firms within which firms are homogeneous in their conduct and performance. The strategic group concept provides an answer to this intriguing question. Researchers in strategic group theory argue that firms within the same strategic group are behaviorally similar and thus tend to compete more fiercely within the group than across groups. In this paper, we focus on the question whether firms within the same group show similar decision‐making characteristics. Strategic‐choice theorists argue that top management teams in firms have substantial discretion in determining the future strategic contour of firms. Upper‐echelon theorists also argue that top managers are the strategists who set the direction of firms and the pace of competition in the industry. Further, they argue that top management team characteristics are an important element that determines the market niche in which a firm competes and the strategic direction a firm follows. Based on these arguments, we expect that there will be a significant link between grouping of firms by the patterns of competitive interactions and grouping of firms by top management team heterogeneity. Moreover, we argue that the closer the TMT heterogeneity of a firm is to the dominant heterogeneity in the competitive interaction group, the better it performs. Copyright © 2000 John Wiley & Sons, Ltd.