Does patenting influence SME sales performance? A quantity and quality analysis of patents in Northern Italy

Abstract

Purpose – In today’s economy, intangibles have become more important than physical assets for firm success. In particular, small and medium enterprises (SMEs) registered an increasing trend in patenting, exceeding large firms in the number of patent registrations. In this context, the purpose of this paper is to investigate the association between patents and SME sales performance, taking into consideration also patent quality. Design/methodology/approach – The approach uses panel regression model to investigate the relationship between patenting and sales, controlling for firm size and firm age. The authors adopt a purposive sampling technique focusing on a sample of Italian SMEs in the mechanical industry. Findings – The results show that the count of patents do not have any effect on sales performance, while the number of jurisdictions where the protection is extended produces a positive and significant result. Practical implications – The main implication for SME entrepreneurs and managers is that relying on a large number of patents does not automatically lead to higher performance; instead, filing those patents which protect particularly valuable innovations could be more productive in terms of SME sales performance Moreover, the results suggest that a longer time lag between patent filing and SME sales performance might be possible. Originality/value – This paper is one of first attempts to shed light on the issue regarding SMEs patent quality. It is notable that the quality of patents in terms of geographical scope is positively associated to SME sales performance.