September 2024
Article
Strategic Management Journal

Standing on the Shoulders of Science

By: Joshua Lev Krieger, Monika Schnitzer and Martin Watzinger

Format:Print
| Pages:26

Abstract

Today’s innovations rely on scientific discoveries of the past, yet only some corporate R&D builds directly on scientific output. In this paper, we analyze U.S. patents to investigate how firms generate value by building on prior art “closer” to science. We show that patent value is decreasing in distance-to-science. Overall, we find a science premium within firms ranging from 5.0% and 18.3%. If we allow for firm sorting into different modes of R&D based on their relative advantage, i.e., when we do not control for firm fixed effects, we find an even larger science premium: patents building directly on scientific publications are 4.0%–42.3% more valuable than patents in the same technology that are not directly based on science.

Keywords

Patent Novelty; Value Capture; Science; Patents; Valuation; Research and Development

Citation

Krieger, Joshua Lev, Monika Schnitzer, and Martin Watzinger. "Standing on the Shoulders of Science." Strategic Management Journal 45, no. 9 (September 2024): 1670–1695.