Close to You? Bias and Precision in Patent-Based Measures of Technological Proximity

37 Pages Posted: 24 Aug 2007 Last revised: 22 Feb 2015

See all articles by Mary Benner

Mary Benner

University of Pennsylvania - Management Department

Joel Waldfogel

University of Minnesota - Twin Cities - Carlson School of Management; National Bureau of Economic Research (NBER); University of Minnesota - Twin Cities - Department of Economics

Date Written: August 2007

Abstract

Patent data have been widely used in research on technological innovation to characterize firms' locations as well as the proximities among firms in knowledge space. Researchers could measure proximity among firms with a variety of measures based on patent class data, including Euclidean distance, correlation, and angle between firms' patent class distributions. Alternatively, one could measure proximity using overlap in cited patents. We point out that measures of proximity based on small numbers of patents are imprecisely measured random variables. Measures computed on samples with few patents generate both biased and imprecise measures of proximity. We explore the effects of larger sample sizes and coarser patent class breakdowns in mitigating these problems. Where possible, we suggest that researchers increase their sample sizes by aggregating years or using all of the listed patent classes on a patent, rather than just the first.

Suggested Citation

Benner, Mary and Waldfogel, Joel, Close to You? Bias and Precision in Patent-Based Measures of Technological Proximity (August 2007). NBER Working Paper No. w13322, Available at SSRN: https://ssrn.com/abstract=1008816

Mary Benner

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

Joel Waldfogel (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of Minnesota - Twin Cities - Department of Economics ( email )

271 19th Avenue South
Minneapolis, MN 55455
United States

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