Discussion Paper Details

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Title: Standing on the shoulders of science

Author(s): Joshua Krieger, Monika Schnitzer and Martin Watzinger

Publication Date: May 2019


Programme Area(s): Financial Economics and Industrial Organization

Abstract: Today's innovations rely on scientific discoveries of the past, yet only some corporate R&D builds directly on scientific output. We analyze U.S. patents to establish three new facts about the relationship between science and the value of inventions. First, we show that patents building directly on science are on average 26% more valuable than patents in the same technology that are disconnected from science. Patents closer to science are also more likely to be in the tails of the value distribution (i.e., greater risk and greater reward). Based on patent text analysis, we show second that patent novelty predicts their value. Third, we find that science-intensive patents are more novel. Overall, using science appears to help firms capture more value through relatively novel inventions.

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Bibliographic Reference

Krieger, J, Schnitzer, M and Watzinger, M. 2019. 'Standing on the shoulders of science'. London, Centre for Economic Policy Research.