Comparing Backward Dispersion Scores

Abstract

Our distance-score methodology for constructing backward-dispersion scores is an improvement over the counting methodology that the Hall, et al. (2001) measures use because (a) it captures the effects of newly-synthesized technological-class codes that are different than the technology-class codes of a focal patent’s claims, and (b) it adjusts for dynamics in technological convergence that we track over time. Our backward-dispersion V-Score is positively-related to return on assets, return on sales and costs per patents. Results show that the backward-dispersion score of Hall, et al. (2001) has negative relationships with return on assets, return on sales and is not significant in our tests of costs per patent. Both versions of the backward-dispersion score have negative relationships with Tobin’s q ratios ― a result which may indicate that investors are not as eager to bet on the rewards of out-of-the box inventions within the communications-services industry as some managers are.

Keywords: Patent claims; Backward citations, Patent scores, Derwent Innovation Index (DII), Radical innovations Patent value

JEL Classification: L21, L86, L96, M13, M19, O31, O32, O39, O34