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Does patenting always help new firm survival? Understanding heterogeneity among exit routes

ABSTRACT: While patents are a valuable resource ensuring the competitive advantage of firms, there is limited evidence on the role of patents in the survival and exit strategies of new firms. To fill the gap in the literature, we examine whether the effects of patenting on new firm survival vary acc...

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Autores principales: Kato, Masatoshi, Onishi, Koichiro, Honjo, Yuji
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Springer US 2021
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8145191/
http://dx.doi.org/10.1007/s11187-021-00481-w
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author Kato, Masatoshi
Onishi, Koichiro
Honjo, Yuji
author_facet Kato, Masatoshi
Onishi, Koichiro
Honjo, Yuji
author_sort Kato, Masatoshi
collection PubMed
description ABSTRACT: While patents are a valuable resource ensuring the competitive advantage of firms, there is limited evidence on the role of patents in the survival and exit strategies of new firms. To fill the gap in the literature, we examine whether the effects of patenting on new firm survival vary according to exit routes (bankruptcy, merger, and voluntary liquidation), while considering the endogeneity of patenting. We use a large-scale sample of new firms in the Japanese manufacturing and information services sectors for the period 2003–2013. The findings indicate that new firms with a higher stock of patents are less likely to go bankrupt. Conversely, new firms with a higher stock of patents are more likely to exit via merger. These findings are consistent, regardless of whether patent stock is measured based on the patent applications or granted patents. Furthermore, we provide evidence that new firms with a higher stock of granted patents are more likely to voluntarily liquidate their businesses. PLAIN ENGLISH SUMMARY: Can new firms enjoy a “patent premium” in terms of survival and exit outcomes? The findings of this study indicate that (1) patenting reduces the risk of bankruptcy, and (2) it increases the odds of exit via merger and voluntary liquidation. On the one hand, patenting ensures that new firms obtain competitive advantages, and thus, survive in the product market. On the other hand, it enables new firms to pursue successful exit strategies in the markets for ideas. This study concludes that new firms can enjoy a patent premium in terms of survival and exit outcomes. In promoting sustainable economic growth via entrepreneurship, policymakers need to shift their focus from creating more firms to creating innovative firms.
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spelling pubmed-81451912021-05-25 Does patenting always help new firm survival? Understanding heterogeneity among exit routes Kato, Masatoshi Onishi, Koichiro Honjo, Yuji Small Bus Econ Article ABSTRACT: While patents are a valuable resource ensuring the competitive advantage of firms, there is limited evidence on the role of patents in the survival and exit strategies of new firms. To fill the gap in the literature, we examine whether the effects of patenting on new firm survival vary according to exit routes (bankruptcy, merger, and voluntary liquidation), while considering the endogeneity of patenting. We use a large-scale sample of new firms in the Japanese manufacturing and information services sectors for the period 2003–2013. The findings indicate that new firms with a higher stock of patents are less likely to go bankrupt. Conversely, new firms with a higher stock of patents are more likely to exit via merger. These findings are consistent, regardless of whether patent stock is measured based on the patent applications or granted patents. Furthermore, we provide evidence that new firms with a higher stock of granted patents are more likely to voluntarily liquidate their businesses. PLAIN ENGLISH SUMMARY: Can new firms enjoy a “patent premium” in terms of survival and exit outcomes? The findings of this study indicate that (1) patenting reduces the risk of bankruptcy, and (2) it increases the odds of exit via merger and voluntary liquidation. On the one hand, patenting ensures that new firms obtain competitive advantages, and thus, survive in the product market. On the other hand, it enables new firms to pursue successful exit strategies in the markets for ideas. This study concludes that new firms can enjoy a patent premium in terms of survival and exit outcomes. In promoting sustainable economic growth via entrepreneurship, policymakers need to shift their focus from creating more firms to creating innovative firms. Springer US 2021-05-25 2022 /pmc/articles/PMC8145191/ http://dx.doi.org/10.1007/s11187-021-00481-w Text en © The Author(s) 2021 https://creativecommons.org/licenses/by/4.0/Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/ (https://creativecommons.org/licenses/by/4.0/) .
spellingShingle Article
Kato, Masatoshi
Onishi, Koichiro
Honjo, Yuji
Does patenting always help new firm survival? Understanding heterogeneity among exit routes
title Does patenting always help new firm survival? Understanding heterogeneity among exit routes
title_full Does patenting always help new firm survival? Understanding heterogeneity among exit routes
title_fullStr Does patenting always help new firm survival? Understanding heterogeneity among exit routes
title_full_unstemmed Does patenting always help new firm survival? Understanding heterogeneity among exit routes
title_short Does patenting always help new firm survival? Understanding heterogeneity among exit routes
title_sort does patenting always help new firm survival? understanding heterogeneity among exit routes
topic Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8145191/
http://dx.doi.org/10.1007/s11187-021-00481-w
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