Identify more inefficiency sources to firm's innovation performance: low-value patent or R&D expenditure congestion?

Abstract

ABSTRACTInnovation performance is critical to strengthening the market competitiveness of firms, but it would always be impaired by low-value patents and innovation resource waste. It is ideal for firms to identify the inefficiency sources in innovation performance and launch target improvements. Therefore, this study proposes a novel method framework of data envelopment analysis (DEA) to measure innovation performance and examine the inefficiencies caused by low-value patents and R&D expenditure waste. Under the proposed method, patent value is measured by the shadow price, and R&D expenditure congestion is identified as a form of waste. To prove its effectiveness, the method is applied to a case of 375 Chinese high-tech firms. Empirical findings are as follows. The presence of low-value patents and R&D expenditure waste are verified. Innovation performance is negatively affected by R&D expenditure waste but positively influenced by patent value. Moreover, higher patent value and greater R&D expenditure congestion ratio are found in firms with high-tech park locations, large sizes and international ownership, showing a positive correlation between patent value and R&D expenditure waste. The findings identify detailed inefficiency sources of firms’ innovations and provide solid managerial suggestions.