Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/175925
Authors: 
Dindaroğlu, Burak
Year of Publication: 
2013
Series/Report no.: 
Working Papers in Economics 13/01
Abstract: 
I study the effects of basic and applied innovation on a firm's market value and total factor productivity for a panel of U.S. manufacturing firms. Basicness of innovation is measured by the index of generality proposed by Trajtenberg, Henderson and Jaffe (1997), and basic and applied innovation stocks are proxied by the stocks of patents that score at the relevant tails of the generality distribution. I find that the market valuation and productivity effects of basic and applied innovation are drastically different. Market value is positively associated with a firm's applied innovation stock, but it exhibits no association with its basic innovation stock. On the other hand, patents at the higher (resp. lower) quartiles of the generality distribution are positively (resp. negatively) associated with total factor productivity and productivity growth. Therefore, complementing previous studies on basic research, I find that the basicness of innovation is associated with a productivity premium.
Subjects: 
Basic innovation
Applied innovation
Patents
Citations
Generality
Market value
Tobin's q
Productivity.
JEL: 
O31
O33
L6
Document Type: 
Working Paper
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