Risky recombinations: Institutional gatekeeping in the innovation process

Abstract

Theories of innovation and technical change posit that inventions that combine knowledge across technology domains have greater impact than inventions drawn from a single domain. The evidence for this claim comes mostly from research on patented inventions and ignores failed patent applications. We draw on insights from research into institutional gatekeeping to theorize that, to be granted, patent applications that span technological domains must have higher quality than otherwise-comparable, narrower applications. Using data on failed and successful patent applications, we estimate an integrated, two-stage model that accounts for this differential selection. We find that more domain-spanning patent applications are less likely to be approved, and that controlling for this differential selection reduces the estimated effect of knowledge recombination on innovative impact by about half. By conceptualizing the patentapproval process as a form of institutional gatekeeping, this paper highlights the institutional underpinnings of and constraints on the innovation process.

When one door closes, another door opens … for some: Evidence from the post‐TRIPS Indian pharmaceutical industry

“…A key contribution of the article is to highlight the importance of knowledge balance in driving the salience of its various knowledge components, thereby shaping the accessibility of, and subsequent choice to prioritize possible innovation strategies. The substantial past literature on innovation has emphasized the independent roles played by depth and breadth (Carnabuci & Bruggeman, ; Ferguson & Carnabuci, ; Nerkar, ; Rosenkopf & Nerkar, ) in brokering knowledge to achieve recombination. Knowledge depth or stacked knowledge in specific areas is crucial to building new knowledge as firms must draw upon the familiar to build the new (Taylor & Greve, ).…”

Does the position in the inter-sectoral knowledge space affect the international competitiveness of industries?

“…A second mechanism is that inventions and innovations develop more easily, and have a greater impact on the economic system (and therefore also on competitiveness), when firms combine knowledge across different technological domains, which in turn may belong to different sectors (Ferguson and Carnabuci, 2017;Fleming and Sorenson, 2001;Basalla, 1988).…”

Lifting the veil: Using a quasi‐replication approach to assess sample selection bias in patent‐based studies

“…With examiner decisions, we can control for potential biases of selecting agents when we know which individual examiner worked on a patent (Ferguson & Carnabuci, ). We may also simply refer to patent filings rather than granted patents as measures of firms' inventive activity and circumvent this specific source of sample selection altogether.…”

“…Truncation from above can instead be attributed to the fact that when inventors engage in research activities that deviate from what they have done in the past, they might produce inventions not only new to them, but also new to the company. Yet, as evaluators of inventions have been documented to be generally (i.e., irrespective of firm strategy) and systematically biased against novelty (Criscuolo, Dahlander, Grohsjean, & Salter, ; Ferguson & Carnabuci, ), research drawing on patent data will likely under‐sample divergent creative efforts.…”

“…Incidental truncation, in turn, may not only result from a firm‐specific appropriability strategy, but also from biases of agents tasked with determining which ideas to put forward for patenting. Here, research across a variety of domains, including the United States Patent and Trademark Office (USPTO) patent examiners, has shown how agents purposively or unconsciously adjust their selection processes depending on factors such as the novelty of ideas, their links or personal similarity to the inventors, or inventors' track record (see, e.g., Boudreau, Guinan, Lakhani, & Riedl, ; DiPrete & Eirich, ; Ferguson & Carnabuci, ; Franke et al, ; Goldin & Rouse, ; Merton, ; Reitzig & Sorenson, ).…”