Australian Innovation: Patent Database Construction and First Evidence

Abstract

The purpose of this paper is to describe the construction of the first Australian patent database for ASX-listed firms from 1990 to 2018 and provide a first look into their innovation activities. We explain the data sources, matching process, assumptions made and limitations of the database. We conduct validity tests on patent-based innovation proxies derived from the database to ascertain whether they capture innovation. We find a positive correlation between firms that have more patents, and investment in research and development, a known observable indicator of innovation. We also find that Australian firm performance has a positive elasticity to patents and that patent productivity is highest for poor-performing firms. Australia’s institutional setting is unique compared to the U.S setting, which to date has dominated the innovation literature. By making the database publicly available, we enable more innovation research to enhance our understanding of what motivates corporate innovation and improves its efficiency under different institutional contexts.

Keywords: Innovation, Australian patents, patent quality, patent database, validity tests

JEL Classification: O32, O35; O38