FREE ELECTRONIC LIBRARY - Dissertations, online materials

Pages:     | 1 |   ...   | 8 | 9 || 11 | 12 |

«John R. Graham, Co-Supervisor David T. Robinson, Co-Supervisor Manuel Adelino Alon P. Brav Manju Puri Aaron K. Chatterji Dissertation submitted in ...»

-- [ Page 10 ] --

Next, I standardize the names of the assignee and assignor in the raw patent assignment dataset, patent original assignee names reported in the USPTO databases, and inventor names in HBS inventor database. Specifically, I employ the name standardization algorithm developed by the NBER Patent Data Project. This algorithm standardizes common company prefixes and suffixes, strips names of punctuation and capitalization and it also isolates a company’s stem name (the main body of the company name), excluding these prefixes and suffixes. I keep only assignment records of which the assignment brief is included under “assignment of assignor’s interest” or “Merger,” that is, I remove cases when the reason for the assignment is clearly not transactions such as a “change of names.”

85D.2 Identifying Patent Transactions

The central part of the identification of a patent transaction uses several basic principles that predict how patent transactions appear in the data. First, the first assignment in a patent’s history is less likely to be a patent transaction. It is more likely to be an original assignment to the inventing firm. Note that this principle is more helpful on patents granted after 1980, when the raw dataset started to be systematically updated. Second, if an assignment record regards only one patent with the brief reason being “assignment of assignor’s interest,” it is less likely to be a transaction, as it should be rare that two parties transact only one patent in a deal (see Serrano (2010)). Third, if the assignor of an assignment is the inventor of the patent, it is less likely that this assignment is a transaction, but instead more likely to be an employee inventor who assigns the patent to her employer. Fourth, if both the assignor and assignee are corporations, it is likely that this assignment is a transaction, with the exception that the patent is transferred within a large corporation (from a subsidiary to the parent, or between subsidiaries). Based on these principles, the algorithm below is a process in which I remove cases which are

unlikely to be patent transactions. The steps I take are:

1. Check if the assignment record date coincides with the original grant date of the patent (the date when the patent was first issued). If it does I label the assignment as a “non-transaction” and it is removed from the data set.

Otherwise, I move to step 2.

2. Check whether the patent assignment record contains only one patent, and is the first record for this patent, with assignment of assignor’s interest as the assignment reason. If the answer is affirmative I move to Step 3. Otherwise, the record is labeled as a potential transaction and I move to Step 4.


3. Compare the assignee in the assignment record with the assignee as of the original patent assignment in the USPTO. Similarly, compare the assignor in the assignment record with the inventor names in HBS patent database. If the assignee name coincides, or, the assignor is the patent inventor(s) plus the assignee is a firm, I then categorize the assignment as a “non-transaction” and it is removed from the dataset. This constraint covers cases when either the assignee or assignor have slightly different names across different databases.

Otherwise, the record is labeled as a potential transaction and I move to Step 4.

4. Perform the analysis described in step 3 on the “potential transactions” with one minor change: when comparing the assignee in the assignment record with the assignee as of the original patent assignment in USPTO, and when comparing the assignor in the assignment record with the inventor names in HBS patent database, I allow for spelling errors captured by Levenshtein edit distance less or equal to 10% of the average length of the two strings under comparison, and I denote these name as roughly equal to each other. Then, if the assignee name roughly coincides, or the assignor is roughly the patent inventor(s) plus the assignee is a firm, then assignment is categorized as a “non-transaction” and is removed from the data set. Otherwise, the record is kept as a “potential transaction” and I move to Step 5.

5. Compare the standardized names and stem names of the assignee and assignor of records in the “potential transactions.” If the names coincide, this is consistent with an internal transfer and the record is labeled as a “non-transaction.” If the names do not coincide the record is labeled as a “transaction.”

–  –  –

E.1 Additional Analysis on the CVC Initiation Stage The result that innovation deteriorations motivate CVC initiations raises a number of questions regarding the mechanisms behind it, which challenge the information acquisition interpretation.

One might worry that the result simply documents that desperate managers are more likely to conduct CVC investment to test their luck without carefully evaluating their abilities and potential benefits from investing in CVC. I investigate this issue by studying the success rate of the portfolio companies invested by CVCs categorized by the severity of innovation declines at initiation. If the concern is correct, we would expect CVC parents that experienced the largest hit before initiating to have lower performance as they mostly make the decision under desperation. In Table E.2, I find that those CVCs whose parents’ performance decline the most actually score a similar, if not higher success rate compared to other CVCs.

One might also worry that deteriorating firms choose to launch CVC units as a constrained optimal—that is—declining firms are more financially constrained and 88 cannot conduct internal R&D or M&As, which are on average more costly than CVC.

In Table E.3, I show that the main result is robust on the subsample of firms whose KZ-index is below industry median or cash flow ratio above industry median (less financially constrained).

In order to confirm the result is not driven by the sampling process or specifications, I conduct a vast of robustness checks. In Table E.4, I show that the result is not sensitive to the length used to capture innovation changes (τ “ 3 in the paper); in Table E.5, I show that the result is robust to removing firms that are large/small, that are from specific industries (such as IT or pharmaceuticals), or that are located in specific locations (in California). In Table E.6 I show that the result holds for deteriorations of product market performance, that is, ROA and growth rate in sales.

E.2 Internal Innovation during CVC

To set the stage, I first examine how CVC investment influences internal innovation.

Under the information acquisition hypothesis, parent firms should be able to harvest the informational benefit, particularly through improvements in information-sensitive activities such as innovation; moreover, newly gathered information should be reflected in those activities.

I assess this idea by characterizing the innovation dynamic of CVC parents around their CVC investment across several dimensions. The first set of measurements is simply innovation quantity and quality as employed in Section 4. The second set of variables is New Cite Ratio and Explorativeness, which measure the proportion of new knowledge used in innovation. New knowledge is identified using patent citations referring to patents that never previously cited by the firm. Specifically, I first define firm i’s existing knowledge in year t as all patents that are owned by i or that were cited by firm i’s patents filed up to t; other patents are considered new knowledge to the firm. New Cite Ratio of a patent is calculated as the ratio between citations 89 made to new knowledge and the total number of citations made by the patent. Based on this measure, a patent is flagged as Explorative if at least 80% of its citations are based on new knowledge (New Cite Ratioě 80%). I transform these patent-level measures to firm-year level by averaging across all patents produced by firm i in year t.1 Higher New Cite Ratio and Explorativeness suggest an innovation scheme focusing on exploring new ideas using new knowledge.

To construct a proper control group for CVC parents, I use a propensity score matching method and match each CVC parent firm that launches its CVC unit in year t with two non-CVC firms from the same year t and 2-digit SIC industry that have the closest propensity score estimated using firm size (the logarithm of total assets), market-to-book ratio, ∆Innovation, and patent stock,2 similar to the sample construction strategy in Bena and Li (2014). The CVC launching year for a CVC parent firm is also the “pseudo-CVC” year for its matched firms, and I include firm data beginning five years before the (pseudo-) event year through five years after the event.

I characterize corporate innovation dynamics around CVC investment under a

standard difference-in-differences (DiD) framework:

–  –  –

where dependent variables yi,t are innovation quantity, quality, new cite ratio, and explorativeness. IpCV CP arentqi is a dummy variable indicating whether firm i is a CVC parent or a matched control firm. IpP ostqi,t indicates whether the firm-year observation is within the rt ` 1, t ` 5s window after (pseudo-) CVC initiations. The 1 This measure is motivated by theoretical work on motivating innovation (e.g., Manso (2011)), and recently implemented in empirical studies (Almeida, Hsu, and Li, 2013; Cust´dio, Ferreira, and o Matos, 2013; Brav, Jiang, Ma, and Tian, 2016).

2 Patent stock is constructed as the total number of patents applied for by the firm up to year t ´ 1.

90 model includes industry-by-year fixed-effects αindustryˆt to absorb industry-specific technological trends.3 The coefficient of interest β measures the incremental changes in innovation benchmarked by those of the matched firms.

Table E.7 reports the results. Columns (1) to (4) study the dynamics of patent quantity and quality. The β-coefficients associated with the difference-in-differences term are positive and significant across all columns, meaning that CVC parent firms’ innovation performance improves following CVC investment. The coefficients should be interpreted in semi-elasticity terms. Following CVC investment, parent firms’ innovation quantity increase is 23.9% larger than the matched firms (column (1)), and these new innovations collect on average 21.7% more lifetime citations (column (3)) compared to the level before CVC investment.

Columns (5) and (6) study the ratio of new knowledge used in innovation. After CVC initiations, firms conduct innovation that involves more intense use of knowledge that they have not used before—the estimate of 0.097 in column (5) can be interpreted as a 9.7% increase in using new information (that is, one out of ten citations). Similarly, in columns (7) and (8), the proportion of explorative patents that are mainly (ě 80%) produced based on new knowledge increases by around 4%.4 3 The result is robust to controlling for firm fixed effects and year fixed effects.

4 Some might worry that this result merely means that CVC parent firms start to diversify and thus innovate in areas that they had not explored before. In unreported results, I find that the increase in using new information concentrates on technological areas closer to the firm’s core expertise, which is inconsistent with the “diversification” story.

91 Table E.1: Innovation Deterioration and CVC Initiation—The Role of Uncertainty This table documents the causal relation between innovation deterioration and CVC initiations across firms with heterogeneous informational environment. The analysis

is performed using extended specifications based on Table 4.2 and Table 4.3:

–  –  –

The panel sample is described in Table 4.1. Observations are categorized into two subgroups by the median of uncertainty level of the firm’s informational environment, indicated by Iuncertainty, which is measured using the average dispersion of patent quality in a technology class weighted by the technological distribution of the firm’s portfolio over technology classes. When estimating using 2SLS, I instrument ∆Innovationi,t´1 with Obsolescence, and the interaction term is instrumented by the interaction of Obsolescence with Iuncertainty,it.

Columns (1) and (4) report the first-stage regression, which regresses the three-year change in innovation quantity (the natural logarithm of the number of new patents in each firm-year plus one) and innovation quality (the natural logarithm of average citations per new patent in each firm-year plus one) on the three-year knowledge obsolescence as defined in (4.2) in the paper. Columns (2) and (5) report the OLS regression results, where IpCV Cqi,t is equal to one if firm i launches a Corporate Venture Capital unit in year t, and zero otherwise. Columns (3) and (6) report the second-stage regression. Firm-level controls Xi,t´1 include the ROA, size (logarithm of total assets), leverage, and R&D ratio (R&D expenditures scaled by total assets).

Industry-by-year dummies are included in the specification to absorb industry-specific time trends in CVC activities and innovation. T-statistics are shown in parentheses and standard errors are clustered by firm. *, **, *** denote statistical significance at the 10%, 5%, and 1% levels, respectively.

–  –  –

94 Table E.3: This table documents the relation between innovation deterioration and the initiation of Corporate Venture Capital on subsamples of financially unconstrained firms. The analysis is performed using the following specification: IpCV Cqi,t “ αindustryˆt ` β ˆ ∆Innovationi,t´1 ` γ ˆ Xi,t´1 ` εi,t, The original panel sample is described in Table III in the paper. In columns (1) and (2), the sample is restricted to firms of which the KZ-index is below industry medians (less financially constrained);

Pages:     | 1 |   ...   | 8 | 9 || 11 | 12 |

Similar works:

«www.ajbms.org Asian Journal of Business and Management Sciences ISSN: 2047-2528 Vol. 1 No. 2 [119-129] MOBILE COMMERCE BEYOND ELECTRONIC COMMERCE: ISSUE AND CHALLENGES Asghar Afshar Jahanshahi (Corresponding Author) PhD Scholar in Business Administration, Department of Commerce & Research Center, University of Pune, India, E-mail: Afsharasghar@yahoo.com Alireza Mirzaie PhD Scholar in Marketing Management, Department of Commerce & Research Center, University of Pune, India, E-mail:...»

«Finance and Economics Discussion Series Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C. The Expected Real Return to Equity Missaka Warusawitharana 2011-14 NOTE: Staff working papers in the Finance and Economics Discussion Series (FEDS) are preliminary materials circulated to stimulate discussion and critical comment. The analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research...»

«THE ENVIRONMENTAL KUZNETS CURVE: EVIDENCE FROM UKRAINE By Oleksandr Kubatko A thesis submitted in partial fulfillment of the requirements for the degree of Master of Arts in Economics National University “Kyiv-Mohyla Academy” Economics Education and Research Consortium Master’s Program in Economics 2008 Approved by _ Mr. Volodymyr Sidenko (Head of the State Examination Committee) Program Authorized to Offer Degree Master’s Program in Economics, NaUKMA Date _ National University...»

«Stadsregio Leeuwarden Arbeidsmarkt, economie en werk 1 Stadsregio Leeuwarden Arbeidsmarkt, economie en werk Leeuwarden, 27 december 2011 2 INHOUD 1 Achtergrond en aanleiding 2 ‘Foto’ van de regionale arbeidsmarkt 3 Trends 4 Betekenis arbeidsmarkt voor Stadsregio 3 1 Achtergrond en aanleiding De Stadsregio Leeuwarden houdt zich bezig met afstemming en ontwikkeling van regionale plannen en projecten op het gebied van wonen, leefomgeving, recreatie, kennis en economie, en bedrijventerreinen....»

«Dissecting the Random Component of Utility Jordan Louviere, Richard Carson, Andrew Ainslie, Trudy Cameron, J.R. DeShazo, David Hensher, Robert Kohn, Tony Marley, Deborah Street A Conceptual Framework For Understanding The Issues The vast majority of research in economics, psychology, social science and business focuses on the effects of manipulated or observational variables on the mean of one or more outcome distributions. Rarely does one see researchers express interest in the effects of...»

«Internet, Economy and Privacy Anil Dagar, Yasuhiro Endo, Abhay Gupta, Yan Li, Kuldip Pabla, Sridhar Ramaswamy, Ikhlaq Sidhu College of Engineering University of California, Berkeley Fung Technical Report No. 2013.04.16 www.funginstitute.berkeley.edu/sites/default/ les/Internet-Economy-and-Privacy.pdf April 16, 2013 130 Blum Hall #5580 Berkeley, CA 94720-5580 | (510) 664-4337 | www.funginstitute.berkeley.edu Lee Fleming, Faculty Director, Fung Institute The Coleman Fung Institute for...»


«Forestry Practice Guide 10 Involving Communities in Forestr y......through community participation Prepared by the Forestry Authority Urban and Community Forestry Advisory Panel, Working Group on Community Involvement: George Barker (English Nature) Clive Davies (Cleveland Community Forest) Julian Evans (Forestry Commission Research Division)(Chairman) Vincent Goodstadt (Strathclyde Regional Council) Simon Hodge (Forestry Commission Research Division)(Secretary) Bede Howell (Timber Growers...»

«SEAN MICHAEL BIDIC, MD, FAAP, FACS OFFICE ADDRESS American Surgical Arts 2950 College Drive Suite 1B Vineland, NJ 08360 Telephone (856) 362-8898 FAX (856) 362-8903 Email: drbidic@AmericanSurgicalArts.com TITLE(S) Founding President, American Surgical Arts, PC Plastic and Reconstructive Surgeon EDUCATION Doctor of Medicine, 1996 Columbia University College of Physicians and Surgeons New York City, New York Master of Fine Arts, 2002 Carnegie Mellon University School of Art Pittsburgh,...»

«CHANGING PATTERNS OF FOREIGN DIRECT INVESTMENTS A Comparative Study of Chinese Investment Behavior in Sub-Saharan Africa Bachelor Thesis Emma Brunberg and Felix Miranda Thyrén NEKH01, Spring 2014 Department of Economics Supervisor: Karin Olofsdotter Abstract In the light of changing global foreign direct investment (FDI) patterns, economic research has started to pay an increasing amount of attention to China as one of the new main investor countries, and emphasize the implications of this in...»

«Timothy D. Adams President and CEO April 12, 2016 Mr. Agustín Carstens Chairman, International Monetary and Financial Committee Mr. Bambang Brodjonegoro Chairman, Development Committee Dear Chairmen: In the wake of this year’s market turbulence—which in large part reflects ongoing investor concerns about global growth prospects—the IMF/World Bank Spring Meetings provide a fresh opportunity to advance key goals set out in the Shanghai G20 communique. In support of these efforts, this...»

«Research on the Potential of China’s CSP Market State Grid Energy Research Institute November 2013 Abstract As an important form of solar energy utilization, CSP (concentrated solar power) has developed rapidly in Europe, the US and other countries and regions in recent years, and is likely to embrace an upsurge in the near future thanks to continuous technological progress and the gradual formation of CSP industry. Researches on CSP’s potential in China and on its technological and...»

<<  HOME   |    CONTACTS
2016 www.dissertation.xlibx.info - Dissertations, online materials

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.