Patents as indicators of corporate technological strength

Quantitative indicators of the technological strengths of individual companies would be an important addition to the financial and economic data used in competitor assessments, merger/acquisition analyses, investment decisions, and corporate planning and management. This paper examines the links bet...

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Bibliographic Details
Published in:Research policy 1987-08, Vol.16 (2), p.143-155
Main Authors: Narin, Francis, Noma, Elliot, Perry, Ross
Format: Article
Language:English
Subjects:
Corporate
Drugs
Economic indicators
Pharmaceutical industry
Power
R&D
Research & development
Studies
Technological
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Summary:Quantitative indicators of the technological strengths of individual companies would be an important addition to the financial and economic data used in competitor assessments, merger/acquisition analyses, investment decisions, and corporate planning and management. This paper examines the links between corporate patent and patent citation data, and several other indicators of corporate performance: changes in sales and profits, research and development budgets, scientific productivity, and expert opinions of company technological strength. The study covers 17 US pharmaceutical companies for which financial, R&D and expert opinion data were readily available. For these pharmaceutical companies it was found that the patent data are an excellent indicator of overall corporate technological strength with (1) an overall correlation of 0.82 between expert opinion of pharmaceutical company technical strength, and the number of US patents granted to the companies, and (2) correlations, in the general range of 0.6 to 0.9, between increases in company profits and sales, and both patent citation frequency and concentration of company patents within a few patent classes.
ISSN:0048-7333
1873-7625
DOI:10.1016/0048-7333(87)90028-X