A new dimension of potential resources in innovation: A wider scope of patent claims can lead to new functionality development

Abstract

Notwithstanding a significant expectation to increase the contribution of technology to productivity in megacompetition, the productivity of technology in Japan's high-technology industry has been declining, resulting in a decrease in competitiveness. The only solution to this twisted trap is to shift the current vicious cycle between R&D, technology stock and production to a virtuous cycle. Given strong constraints in fiscal investment, a practical solution to achieving a virtuous cycle is effective utilization of potential resources in innovation. A wider scope for patent claims can be an ingenious trigger leading to a virtuous cycle involving new functionality development, increased productivity of technology, production increases, greater R&D investment and a sustainable wider scope of patent claims. Japan's Patent Office introduced the Revised Examination Guideline (June 1993 Examination Guideline), including description requirements for patent applications. This induced leading high-technology firms to broaden their scope relative to claiming patents and succeeded in constructing the foregoing virtuous cycle, thereby demonstrating the significance of a new dimension of potential resources in innovation. On the basis of an empirical analysis focusing on techno-managerial efforts by Japan's pharmaceutical firms with both indigenous and the US capital, this paper attempts to demonstrate the foregoing hypothetical view. A noteworthy implication obtained from the research is that while leading pharmaceutical firms with indigenous capital have constructed a virtuous cycle by means of a wider scope of patent claims and have achieved new functionality development as a result, firms with the US capital have demonstrated a higher level of performance.