Exploration and Exploitation in US Technological Change

43 Pages Posted: 16 Aug 2021

See all articles by Vasco M. Carvalho

Vasco M. Carvalho

Universitat Pompeu Fabra/CREI; Centre for Economic Policy Research (CEPR); University of Cambridge

Mirko Draca

University of Warwick

Nikolas Kuhlen

University of Cambridge - Faculty of Economics; The Alan Turing Institute

Date Written: August 6, 2021

Abstract

How do firms and inventors move through knowledge space as they develop their innovations? We propose a method for tracking patterns of exploration and exploitation in patenting behaviour in the US for the period since 1920. Our exploration measure is constructed from the text of patents and involves the use of Bayesian Surprise to measure how different current patent-based innovations are from existing portfolios. Our results indicate that there are distinct life-cycle patterns to firm and inventor exploration. Furthermore, exploration activity is more geographically concentrated than general patenting, but this concentration is centred outside the main hubs of patenting.

Keywords: innovation, technology, text analysis, machine learning, bayesian surprise, inventors

JEL Classification: C55, O31, O33, O47

Suggested Citation

Carvalho, Vasco M. and Draca, Mirko and Kuhlen, Nikolas, Exploration and Exploitation in US Technological Change (August 6, 2021). Available at SSRN: https://ssrn.com/abstract=3900479 or http://dx.doi.org/10.2139/ssrn.3900479

Vasco M. Carvalho

Universitat Pompeu Fabra/CREI ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

HOME PAGE: http://www.crei.cat/people/carvalho/welcome.html

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

University of Cambridge ( email )

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

Mirko Draca (Contact Author)

University of Warwick ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

Nikolas Kuhlen

University of Cambridge - Faculty of Economics ( email )

Sidgwick Avenue
Cambridge, CB3 9DD
United Kingdom

The Alan Turing Institute ( email )

British Library
96 Euston Road
London, NW1 2DB
United Kingdom

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