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Research Productivity and Patent Quality: Measurement with Multiple Indicators

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  • Jean Olson Lanjouw
  • Mark Schankerman

Abstract

We analyse the determinants of the decline in measured research productivity (the patent/R&D ratio)using panel data on manufacturing firms in the U.S. for the period 1980-93. We focus on three factors: the level of demand, the quality of patents, and technological exhaustion. We first develop an index of patent 'quality' using detailed information on patents in the U.S. in seven technology fields. Using a factor model, we construct a minimum-variance index based on four patent characteristics and show that using multiple indicators substantially reduces the measured variance in quality. We then show that research productivity at the firm level is negatively related to the patent quality index and the level of demand, as predicted by an optimizing model of R&D, and positively related to the stock market valuation of patented innovations held by firms.

Suggested Citation

  • Jean Olson Lanjouw & Mark Schankerman, 2002. "Research Productivity and Patent Quality: Measurement with Multiple Indicators," STICERD - Economics of Industry Papers 32, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    • Handle: RePEc:cep:stieip:32
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    References listed on IDEAS

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    1. Lanjouw, Jean O & Schankerman, Mark, 2001. "Characteristics of Patent Litigation: A Window on Competition," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 129-151, Spring.
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    6. Hall, Bronwyn H. & Jaffee, Adam & Trajtenberg, Manuel, 2000. "Market Value and Patent Citations: A First Look," Department of Economics, Working Paper Series qt1rh8k6z2, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
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    Cited by:

    1. Nelson, Kelly P. & Parton, Lee C. & Brown, Zachary S., 2022. "Biofuels policy and innovation impacts: Evidence from biofuels and agricultural patent indicators," Energy Policy, Elsevier, vol. 162(C).
    2. Carol Robbins & Olympia Belay & Matthew Donahoe & Jennifer Lee, 2012. "Industry-level Output Price Indexes for R&D: An Input-cost Approach with R&D Productivity Adjustment," BEA Working Papers 0090, Bureau of Economic Analysis.

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    More about this item

    Keywords

    Patents; R&D productivity; technological exhaustion.;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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