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Financial implications of technology-class code popularity and usage among industry competitors

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Abstract

Novel measures of technology popularity and usage were constructed and tested to assess the returns available from patenting within mainstream versus more-exotic technology-classification codes (or pairs of codes). Popularity suggested the frequency density with which technological codes (pairs) were most frequently found among competitors’ patents. Usage measured whether firms dominated particular technology codes (or pairs of codes) relative to competitors. Firms’ financial performance varied according to whether firms followed “me-too” technological leads or patented within less-commonplace technologies. Results suggested that firms should exercise caution when spending heavily in pursuing research leads within crowded technological streams. Results also implied that some firms successfully countered popular trends in pursuing technological leads within declining arenas when industry interest went elsewhere. Since evolutionary waves of technology affected the profitability potential of industries, we used longitudinal tests within three industries that developed from various structural stages of development to illustrate the effects of demand growth and establishment of technological standards upon the patenting strategies suggested by popularity and usage measures.

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Notes

  1. The 289-code Derwent World Patent Index also used “manual codes” which were extensions of their 3-character primary codes that could be used to classify a specific technology more precisely. The manual extensions in the Derwent classification scheme were similar in nature to the more-extensive International Patent Classification (IPC) scheme, just as the NAICS and SIC classification systems can be analyzed at differing levels of granularity.

  2. W02 was the 3-character alphanumeric Derwent code for aerials, waveguides, resonators and other distributed constant components, for transmitters, transceivers, transponders, communication receivers, and line transmission systems. The code included inventions for radio systems, including diversity, relay, and mobile communications (including cellular), optical and ultrasonic wave transmission systems, as well as spread-spectrum communication, secret communication, and jamming. Inventions encompass facsimile, TV systems (including color, stereoscopic, cable, subscription, satellite and high definition systems), as well as stereophonic broadcast systems.

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Acknowledgements

This work was supported in part by funding from the Columbia Business School.

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Authors and Affiliations

  1. Columbia Business School, 701 Uris Hall, New York, NY, 10027, USA

    Kathryn Rudie Harrigan

  2. School of Engineering and Applied Science, Columbia University, 315 Mudd Hall, New York, NY, 10027, USA

    Yunzhe Fang

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  1. Kathryn Rudie Harrigan
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  2. Yunzhe Fang
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Correspondence to Kathryn Rudie Harrigan.

Additional information

Research was sponsored by Columbia Business School Division of Research. Research assistance was provided by Ziqiu Zang, Fan Gong, Yueyue Deng, Hongyu Chen, Donggi Ahn, Chiara Di Guardo, Elona Marku, Brian Velez, Jesse Garrett, Patent Office of the Sardegna Ricerche Scientific Park, Thomson Reuters, Emanuela Marrocou, and an anonymous reviewer.

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Harrigan, K.R., Fang, Y. Financial implications of technology-class code popularity and usage among industry competitors. Scientometrics 121, 25–51 (2019). https://doi.org/10.1007/s11192-019-03185-x

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