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Commercialization of patents and external financing during the R&D phase

  • Svensson, Roger

Using a unique database on individual Swedish patents, a survival model estimates how different factors influence the time it takes until commercialization starts. To the best of my knowledge, such an analysis has not been undertaken before. For external financing of patent projects and small technology-based firms, Sweden has during long time relied on government support rather than private venture capital firms. The empirical results show that the larger share of the patent-owners’ costs during the R&D-phase that are covered by government financial support, the longer time it takes until the patents are commercialized. It seems like the government financing creates a pool of patents with bad perspectives of commercialization. The reasons to the bad performance are: 1) the design of the government loans, where the patent owner can escape from paying back the loan if the project failures; and 2) the competence and incentives of the government institutions, which are not profit maximizing. A policy implication is therefore that the government should either change the conditions of the loans or, preferably, stop acting as a venture capital firm. The government should instead facilitate private solutions and the growth of private venture capital firms.

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Article provided by Elsevier in its journal Research Policy.

Volume (Year): 36 (2007)
Issue (Month): 7 (September)
Pages: 1052-1069

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Handle: RePEc:eee:respol:v:36:y:2007:i:7:p:1052-1069
Contact details of provider: Web page: http://www.elsevier.com/locate/respol

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  1. Steven N. Kaplan & Per Stromberg, 2001. "Venture Capitalists As Principals: Contracting, Screening, and Monitoring," NBER Working Papers 8202, National Bureau of Economic Research, Inc.
  2. Bruno Van Pottelsberghe & Dominique Guellec, 2004. "From R&D to productivity growth: do the institutional settings and the sources of funds of R&D matter?," ULB Institutional Repository 2013/6207, ULB -- Universite Libre de Bruxelles.
  3. Bruno van Pottelsberghe de la Potterie & Didier François, 2009. "The Cost Factor in Patent Systems," Journal of Industry, Competition and Trade, Springer, vol. 9(4), pages 329-355, December.
  4. Zvi Griliches, 1990. "Patent Statistics as Economic Indicators: A Survey," NBER Working Papers 3301, National Bureau of Economic Research, Inc.
  5. Ariel Pakes, 1984. "Patents as Options: Some Estimates of the Value of Holding European Patent Stocks," NBER Working Papers 1340, National Bureau of Economic Research, Inc.
  6. Goldfarb, Brent & Henrekson, Magnus, 2001. "Bottom-Up vs. Top-Down Policies towards the Commercialization of University Intellectual Property," SSE/EFI Working Paper Series in Economics and Finance 463, Stockholm School of Economics, revised 26 May 2002.
  7. Wesley M Cohen & Richard R Nelson & John P Walsh, 2003. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (Or Not)," Levine's Working Paper Archive 618897000000000624, David K. Levine.
  8. Kaivanto, Kim & Stoneman, Paul, 2007. "Public provision of sales contingent claims backed finance to SMEs: A policy alternative," Research Policy, Elsevier, vol. 36(5), pages 637-651, June.
  9. Dominique Guellec & Bruno Van Pottelsberghe De La Potterie, 2003. "The impact of public R&D expenditure on business R&D," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(3), pages 225-243.
  10. Vincenzo Maggioni & Mario Sorrentino & Mary Williams, 1999. "Mixed Consequences of Government Aid for New Venture Creation: Evidence from Italy," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 3(3), pages 287-305, September.
  11. Samuel Kortum & Josh Lerner, 2000. "Assessing the Contribution of Venture Capital to Innovation," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 674-692, Winter.
  12. Schankerman, Mark & Pakes, Ariel, 1986. "Estimates of the Value of Patent Rights in European Countries during the Post-1950 Period," Economic Journal, Royal Economic Society, vol. 96(384), pages 1052-76, December.
  13. Paul Gompers & Josh Lerner, 2001. "The Venture Capital Revolution," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 145-168, Spring.
  14. Steven N. Kaplan & Per Stromberg, 2001. "Venture Capitals As Principals: Contracting, Screening, and Monitoring," American Economic Review, American Economic Association, vol. 91(2), pages 426-430, May.
  15. Svensson, Roger, 2002. "Commercialization of Swedish Patents – A Pilot Study in the Medical and Hygiene Sector," Working Paper Series 583, Research Institute of Industrial Economics.
  16. Jaffe, Adam B & Lerner, Josh, 2001. "Reinventing Public R&D: Patent Policy and the Commercialization of National Laboratory Technologies," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 167-198, Spring.
  17. Hellmann, Thomas F. & Puri, Manju, 2000. "Venture Capital and the Professionalization of Start-up Firms: Empirical Evidence," Research Papers 1661, Stanford University, Graduate School of Business.
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  19. repec:fth:harver:1473 is not listed on IDEAS
  20. Morgan, Robert P & Kruytbosch, Carlos & Kannankutty, Nirmala, 2001. "Patenting and Invention Activity of U.S. Scientists and Engineers in the Academic Sector: Comparisons with Industry," The Journal of Technology Transfer, Springer, vol. 26(1-2), pages 173-183, January.
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