Export effects of overseas patent applications by Korean SMEs

This study analyzed the impact of overseas patent applications by Korean companies, particularly focusing on small and medium-sized enterprises (SMEs), on their export performance, utilizing data from 1999 to 2019. We integrated the Documentation Database patent dataset from the EPO with the Korean financial dataset. The fundamental hypothesis of this study is that, unlike large enterprises (LEs), SMEs find the cost of filing and maintaining patents overseas burdensome. Consequently, they tend to file patents primarily in their key export markets rather than in major global markets, which implies that, in contrast to LEs, the patent applications of SMEs may positively impact exports only to the specific countries where they have filed. The key findings are as follows. Firstly, unlike LEs, SMEs tend to export specifically to the countries where they have filed. These results demonstrate how firms’ behavior can vary depending on the heterogeneity in firm size. Secondly, the effect of overseas patents filed by Korean SMEs is most pronounced for the ASEAN countries. Based on these insights, we recommend the implementation of policy measures such as providing financial support to cover the costs of overseas patent applications for SMEs.