Quick or Broad Patents? Evidence from U.S. Startups

76 Pages Posted: 8 Mar 2020 Last revised: 9 Nov 2021

See all articles by Deepak Hegde

Deepak Hegde

New York University (NYU) - Leonard N. Stern School of Business

Alexander Ljungqvist

Centre for Economic Policy Research (CEPR); Swedish House of Finance; European Corporate Governance Institute (ECGI)

Manav Raj

University of Pennsylvania - Management Department

Date Written: June 21, 2021

Abstract

We study the effects of patent scope and review times on startups and externalities on their rivals. We leverage the quasi-random assignment of U.S. patent applications to examiners and find that grant delays reduce a startup’s employment and sales growth, chances of survival, access to external capital, and future innovation. Delays also harm the growth, access to external capital, and follow-on innovation of the patentee’s rivals, suggesting that quick patents enhance both inventor rewards and generate positive externalities. Broader scope increases a startup’s future growth (conditional on survival) and innovation but imposes negative externalities on its rivals’ growth.

Keywords: Patents, innovation, scope, entrepreneurship, venture capital

JEL Classification: D23, G24, L26, O34

Suggested Citation

Hegde, Deepak and Ljungqvist, Alexander and Ljungqvist, Alexander and Raj, Manav, Quick or Broad Patents? Evidence from U.S. Startups (June 21, 2021). NYU Stern School of Business, Swedish House of Finance Research Paper No. 20-11, Available at SSRN: https://ssrn.com/abstract=3511268 or http://dx.doi.org/10.2139/ssrn.3511268

Deepak Hegde (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Alexander Ljungqvist

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Manav Raj

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

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