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  5. The Innovation Process
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The Innovation Process

Paper Session

Sunday, Jan. 5, 2025 10:15 AM - 12:15 PM (PST)

San Francisco Marriott Marquis, Yerba Buena Salon 14 & 15
Hosted By: American Finance Association
  • Filippo Mezzanotti, Northwestern University

Unpacking the Innovator-Inventor Gap: Evidence from Engineers

Colleen Chien
,
University of California-Berkeley
Jillian Grennan
,
University of California-Berkeley

Abstract

Using detailed administrative and survey data from engineers, we provide insights into the processes that lead to patent filing. We document these processes' opt-in, competitive nature, and how firm dynamics and demographics shape them. Only one-third of engineers submit ideas for patenting, and just half of these lead to patent applications. Women are significantly less involved at each stage of the journey from innovator to named inventor, contributing to a larger ``innovator-inventor gap," which engineers perceive to be associated with ineffective management and culture. Analysis of citation patterns suggests that high-quality patents are lost in firms with larger gender gaps."

Teamwork and the Homophily Trap: Evidence from Open Source Software

Davidson Heath
,
University of Utah
Nathan Seegert
,
University of Utah
Jeffrey Yang
,
University of Utah

Abstract

We investigate team diversity and productivity in the setting of open source software. We find that team diversity is low relative to the contributor pool, with the most mass at the lowest level of diversity (monoculture). This pattern is explained by homophily, the preference to associate with similar people, which leads to teams becoming trapped in low-diversity equilibria. Our results are robust to instrumenting changes in team diversity using teams’ exposure to country-level changes in Internet access. Teams that escape the “homophily trap” add more diversity and increase productivity relative to teams that do not.

Patent Hunters

Lauren Cohen
,
Harvard University
Umit Gurun
,
University of Texas-Dallas
Katie Moon
,
University of Colorado-Boulder
Paula Suh
,
University of Georgia

Abstract

Analyzing millions of patents granted by the USPTO between 1976 and 2020, we find a pattern where specific patents only rise to prominence after considerable time has passed. Amongst these late-blooming influential patents, we show that there are key players (patent hunters) who consistently identify and develop them. Although initially overlooked, these late-blooming patents have significantly more influence on average than early-recognized patents and are associated with significantly more new product launches. Patent hunters, as early detectors and adopters of these late-blooming patents, are also associated with significant positive rents. Their adoption of these overlooked patents is associated with a 6.4% rise in sales growth (t=3.02), a 2.2% increase in Tobin’s Q (t=3.91), and a 2.2% increase in new product offerings (t=2.97). We instrument for patent hunting, and find strong evidence that these benefits are causally due to patent hunting. The rents associated with patent hunting on average exceed those of the original patent creators themselves. Patents hunted tend to be closer to the core technology of the hunters, more peripheral to the writers, and to be in less competitive spaces. Lastly, patent hunting appears to be a persistent firm characteristic and to have an inventor-level component.

Discussant(s)
Jiajie Xu
,
University of Iowa
Geoffrey Tate
,
University of Maryland
Joan Farre-Mensa
,
University of Illinois-Chicago
JEL Classifications
  • G3 - Corporate Finance and Governance