Standing on the Shoulders of Science

68 Pages Posted: 11 Jun 2019 Last revised: 14 Jul 2021

See all articles by Martin Watzinger

Martin Watzinger

Ludwig Maximilian University of Munich (LMU)

Monika Schnitzer

Ludwig Maximilian University of Munich (LMU)

Date Written: May 2019

Abstract

Today's innovations rely on scientific discoveries of the past, yet only some corporate R&D builds directly on scientific output. We analyze U.S. patents to establish three new facts about the relationship between science and the value of inventions. First, we show that patents building directly on science are on average 26% more valuable than patents in the same technology that are disconnected from science. Patents closer to science are also more likely to be in the tails of the value distribution (i.e., greater risk and greater reward). Based on patent text analysis, we show second that patent novelty predicts their value. Third, we find that science-intensive patents are more novel. Overall, using science appears to help firms capture more value through relatively novel inventions.

JEL Classification: O30, O31, O33, O34

Suggested Citation

Watzinger, Martin and Schnitzer, Monika, Standing on the Shoulders of Science (May 2019). CEPR Discussion Paper No. DP13766, Available at SSRN: https://ssrn.com/abstract=3401853

Martin Watzinger

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

Monika Schnitzer (Contact Author)

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

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