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Patents to Products: Product Innovation and Firm Dynamics

Author

Listed:
  • David Argente
  • Salomé Baslandze
  • Douglas Hanley
  • Sara Moreira

Abstract

We match patents to products using natural language methods applied to detailed product descriptions and patent texts in the consumer goods sector. While more than half of product innovations originate from non-patenting firms, patent filings are on average followed by subsequent product introductions. Yet this relationship weakens with firm size. Patents held by market leaders also yield revenue premiums beyond what can be explained by their own product introductions and are associated with stronger deterrence of competitors’ innovations. To interpret these findings, we develop a simple growth model in which larger firms have stronger incentives to engage in strategic patenting—filing for protection rather than market innovation—which dampens innovation and slows creative destruction.

Suggested Citation

  • David Argente & Salomé Baslandze & Douglas Hanley & Sara Moreira, 2025. "Patents to Products: Product Innovation and Firm Dynamics," NBER Working Papers 34592, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34592
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    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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