Browse > Article
http://dx.doi.org/10.23895/kdijep.2020.42.3.33

Do Patents Lead to an Increase in Firm Value? Evidence from Korea  

LEE, JANGWOOK (Korea Development Institute)
Publication Information
KDI Journal of Economic Policy / v.42, no.3, 2020 , pp. 33-52 More about this Journal
Abstract
Patents are widely used in the literature as a measure of firm-level innovation. It is regarded that patents improve a firm's operational environment and ultimately increase the value of the firm. However, the relationship between patents and firm value in Korea is under-explored in the literature due to the difficulty of constructing datasets. This paper examines whether patents in Korea increase the market value of a firm. To do this, I exploit novel data on firm-level patents and financial information of all listed Korean companies during the period of 1993-2015 and estimate the non-linear production-function type of Tobin's q equations on R&D, patents, and citations. Surprisingly, I find that patents and citations are weakly associated with firm value, while R&D is strongly associated with an increase in firm value. These results direct imply that policymakers in Korea should enhance patenting incentives to encourage firms to innovate.
Keywords
Innovation; Firm Value; Tobin's q; R&D; Patent;
Citations & Related Records
Times Cited By KSCI : 2  (Citation Analysis)
연도 인용수 순위
1 Youn, Taehoon, 2004. "Market Evaluation of the Value of Patent," KDI 2004-26, 2, Korea Development Institute (in Korean).
2 Alcacer, Juan and Michelle Gittelman. 2006. "Patent citations as a measure of knowledge flows: the influence of examiner citations" The Review of Economics and Statistics, 88(4): 774-779.   DOI
3 Bloom, Nick and John Van Reenen. 2002. "Patents, real options, and firm performance" The Economic Journal, 112(478): C97-C116.   DOI
4 Chung, Chaho 2004. "Historical change of Korean patent system," STEPI 2004-06, Science & Technology Policy Institute (in Korean).
5 Chung, Jiyoon, 2017. "Provisional patent application as a real option in the patent-secrecy tradeoff: Evidence from the American Inventors Protection Act (AIPA)" Paper presented at the Academy of Management Annual Conference, Atlanta GA, United States.
6 Griliches, Zvi, 1981. "Market value, R&D and patents", Economic letters, 7: 183-187.   DOI
7 Hall, Bronwyn H., Adam B. Jaffe, and Manuel Trajtenberg, 2005. "Market value and Patent Citations" The RAND Journal of Economics, 36(1): 16-38.
8 Jeong, Jae-kwan, and Byung-Keun Kim 2017. "A Study on the Impact of Patent Quality on the Firm's Market Value," Journal of Technology Innovation, 25(3): 265-297 (in Korean).   DOI
9 Kim, Seokkwan, 2004. "Innovation patterns and strategies of pharmaceutical industry," STEPI 2004-12, Science & Technology Policy Institute (in Korean).
10 Kostat, Korean standard industrial classification, issue number: 11-1240000-000111-14 (in Korean).
11 Lee, Jangwook, 2019(forthcoming), "A study on firm-level effects of knowledge capital: focusing on patents and citations of firms," KDI (in Korean).
12 Lee, Jihong, Hyunkyeong Lim, and Daeyoung Jeong 2018. "Fourth Industrial Revolution and Innovative Capacity of South Korea: Comparative Analysis of Major Industrial Nations with US Patent Data, 1976-2015," Bank of Korea Working paper (in Korean).
13 Lee, Jihong, Hyunkyeong Lim, Sangdong Kim, Keunsang Song, and Jae Yu Jung 2020. "Korea Patent Data Project (KoPDP): Contents and Methods," The Korean Economic Forum 12-4, 125-181 (in Korean).
14 Lee, Kihwan, and BeongsupYoon 2006. The Effects of Patents on Firm Value;Venture vs. non- Venture, STEPI 2005-08, Science & Technology Policy Institute (in Korean).
15 Li, Rui, Tamy Chambers, Ying Ding, Guo Zhang, and Liansheng Meng, 2014. "Patent citation analysis: Calculating science linkage based on citing motivation," Journal of the Association for Information Science and Technology, 65(5): 1007-1017.   DOI
16 Ryu, Taegyu, 2019(forthcoming). "Policies for improving the value of intellectual property," KDI, Korea Development Institute (in Korean).