Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Working Knowledge
Business Research for Business Leaders
  • Browse All Articles
  • Popular Articles
  • Cold Call Podcasts
  • About Us
  • Leadership
  • Marketing
  • Finance
  • Management
  • Entrepreneurship
  • All Topics...
  • Topics
    • COVID-19
    • Entrepreneurship
    • Finance
    • Gender
    • Globalization
    • Leadership
    • Management
    • Negotiation
    • Social Enterprise
    • Strategy
  • Sections
    • Book
    • Cold Call Podcast
    • HBS Case
    • In Practice
    • Lessons from the Classroom
    • Op-Ed
    • Research & Ideas
    • Research Event
    • Sharpening Your Skills
    • What Do You Think?
    • Working Paper Summaries
  • Browse All
    • COVID-19 Business Impact Center
      COVID-19 Business Impact Center
      The Use and Misuse of Patent Data: Issues for Corporate Finance and Beyond
      11 Dec 2017Working Paper Summaries

      The Use and Misuse of Patent Data: Issues for Corporate Finance and Beyond

      by Josh Lerner and Amit Seru
      Corporate finance researchers who analyze patent data are at risk of making highly predictable errors. The problem arises from dramatic changes in the direction and location of technological innovation (and patenting practice) over recent decades. This paper explains the pitfalls and suggests practical steps for avoiding them.
      LinkedIn
      Email

      Author Abstract

      Patents and citations are powerful tools for understanding innovative activity inside the firm and are increasingly used in corporate finance research. But due to the complexities of patent data collection and the changing spatial and industry composition of innovative firms, biases may be introduced. We highlight several patent-level biases induced by truncation of reported patent awards and citations, affecting estimates of time trends and patterns across technology classes and regions. We then introduce measures of patent and citation biases. When aggregated at the firm level, these survive popular methods of adjustment and are correlated with firm-level characteristics. We show that these issues can lead to problematic—and ex ante predictable—inferences, using several examples from prominent streams of finance literature that use patent data. We suggest a number of concrete steps that researchers can employ to avoid biased inferences.

      Paper Information

      • Full Working Paper Text
      • Working Paper Publication Date: November 2017
      • HBS Working Paper Number: HBS Working Paper #18-042
      • Faculty Unit(s): Finance; Entrepreneurial Management
        Trending
          • 24 Oct 2016
          • Research & Ideas

          Bernie Madoff Explains Himself

          • 25 Feb 2019
          • Research & Ideas

          How Gender Stereotypes Kill a Woman’s Self-Confidence

          • 08 Mar 2021
          • In Practice

          COVID Killed the Traditional Workplace. What Should Companies Do Now?

          • 14 Apr 2021
          • Research & Ideas

          The High Cost of the Slow COVID Vaccine Rollout

          • 05 Apr 2021
          • What Do You Think?

          Why Can’t More Leaders Teach?

      Find Related Articles
      • Management Analysis, Tools, and Techniques
      • Analysis
      • Patents

      Sign up for our weekly newsletter

      Interested in improving your business? Learn about fresh research and ideas from Harvard Business School faculty.
      ǁ
      Campus Map
      Harvard Business School Working Knowledge
      Baker Library | Bloomberg Center
      Soldiers Field
      Boston, MA 02163
      Email: Editor-in-Chief
      →Map & Directions
      →More Contact Information
      • Make a Gift
      • Site Map
      • Jobs
      • Harvard University
      • Trademarks
      • Policies
      • Digital Accessibility
      Copyright © President & Fellows of Harvard College