An empirical analysis of firm process and product patenting

Abstract

This paper presents an empriical study of the determinants of firm patenting. Since industrial research and development (R&D) encompasses a variety of activities, this study distinguishes between patents on process innovations and patents on product innovations. The property rights provided by a patent may differ between process and product patents, which suggests that the determinants of process innovations and product innovations may difer as well. Several recent studies have distinguished between research directed toward process innovations and research directed toward product innovations. Scherer (1983a) included measures of process R&D spending and product R&D spending in regressions for inter-industry differences in productivity growth. Link and Lunn (1984) found that the returns to process-related R&D activity exceed the returns to product-related R&D activity. Link (1982) found inter-firm differences in the allocation of R&D spending for process innovations and product innovations. Lunn (1986) found differences in the determinants, as well as the effects, of process patenting and product patenting at the industry level. This paper examines whether the determinants of product and process patenting differ at the firm level.