Technological Impact of Inventions The effects of interfirm network characteristics Steffen Keijl Institute for Strategy, Technology and Organization Professor Christopher Lettl Vienna University of Economics and Business

Why impact of inventions? Potential benefits of impactful inventions:  Economic value (e.g. licensing out) (e.g. Bessen, 2008; Nair et al., 2010; Reitzig, 2003; Trajtenberg, 1990)  Use of inventions in R&D pipeline through external partnering (e.g. Eisenhardt & Schoonhoven, 1996; Stuart, 1998)  Increased visibility  Status (e.g. Madhaven et al., 1998) STEFFEN KEIJL │ TECHNOLOGICAL IMPACT OF INVENTIONS

Creation of inventions STEFFEN KEIJL │ TECHNOLOGICAL IMPACT OF INVENTIONS Invention creation t AntecedentsImpact Year t-t’t+t’

Impact of inventions Existing literature on firm level: E.g. Ahuja, 2000; Sampson, 2007; Schilling & Phelps, 2007; Phene et al., 2006; Srivastava & Gnyawali, 2011 STEFFEN KEIJL │ TECHNOLOGICAL IMPACT OF INVENTIONS Invention creation t AntecedentsImpact Year t-t’t+t’ Existing literature on invention level: E.g. Dahlin & Behrens, 2005; Nemet & Johnson, 2012; Schoenmakers & Duysters, 2010 Firm level antecedents for impact?

E.g. biopharmaceutical alliance network Two variables: Number of (R&D) alliances “Reach” to other firms STEFFEN KEIJL │ TECHNOLOGICAL IMPACT OF INVENTIONS Antecedents for impact: Interfirm network

Baseline Hypotheses  Impact influenced by direct partners as the consequence of knowledge sharing (Zander & Kogut, 1995) H1. The more direct alliance partners a firm has, the more impact of its inventions.  Impact as the consequence of information spillovers on non-partners (Ahuja, 2000), efficient reach of other firms, and increased visibility H2. The better a firm is able to reach other firms (in the network), the more impact of its inventions. STEFFEN KEIJL │ TECHNOLOGICAL IMPACT OF INVENTIONS

Baseline conceptual model Number of R&D alliances Technological impact “Reach” to other firms

Full conceptual model Number of R&D alliances Impact on non-partners (global impact) Impact on direct partners (local impact) “Reach” to other firms

Data & sampling  Biopharmaceutical industry sampling period from 1985 until 2007 (Phene et al., 2006; Rothaermel & Hess, 2007)  Final sample of 179 publicly traded companies:  30,168 biopharmaceutical patents (Patent data from the United States Patent Office through NBER)  Involved in 591 R&D alliances (Alliance Data from SDC Platinum by Thomson Reuters)  Additional firm-related control variables (Compustat by WRDS) STEFFEN KEIJL │ TECHNOLOGICAL IMPACT OF INVENTIONS

Variables  Independent:  Number of R&D alliance partners in year t (degree centrality (Ahuja, 2000))  “Reach” to other firms in year t based on inter-organizational network position (average distance weighted reach (adjusted closeness-centrality measure / degree centrality)) (Schilling & Phelps, 2007)  Dependent:  Total number of forward citations of a firms patents in year t  Differentiated by who is citing the patent (self-cites, partner-cites, nonpartner-cites) (Hegde & Sampat, 2009; Hall et al., 2005; and others)  Controls:  Firm size, R&D expenses, sales, patent experience STEFFEN KEIJL │ TECHNOLOGICAL IMPACT OF INVENTIONS

Descriptive statistics STEFFEN KEIJL │ TECHNOLOGICAL IMPACT OF INVENTIONS VariableMeanSTDMinMax 1Total cites Total cites minus self-cites Cites alliance partners Cites non-partners Firm size R&D Expenditures Sales Patent experience Degree centrality Closeness centrality a N: 1469 firmyear observations in the period from

Total citesTotal cites minus self citationsCites alliance partnersCites non-partners Model 1Model 2Model 3Model 1Model 2Model 3Model 1Model 2Model 3Model 1Model 2Model 3 Firm size 0.005***0.004*** 0.005***0.003** 0.017***0.007* 0.003** (0.001) (0.004)(0.003) (0.001) R&D Expenditures **0.227**0.245** (0.058)(0.054)(0.053)(0.060)(0.056)(0.055)(0.105)(0.081)(0.079)(0.066)(0.065) Sales * ***-0.031** (0.004) (0.003) (0.015)(0.011) (0.003) Patent experience 0.006***0.005*** 0.006*** 0.007***0.008*** 0.007*** (0.001) Degree centrality 0.038***0.042***0.037***0.041*** 0.127***0.148*** * (0.006) (0.005) (0.011)(0.012) (0.006) Closeness centrality 0.025***0.023*** 0.071*** 0.022*** (0.005) (0.020) (0.006) Constant 0.786***0.801***0.660***0.926***0.921***0.798***-1.324***-1.789***-2.363***0.616***0.624***0.522*** (0.096)(0.090)(0.095) (0.092)(0.096)(0.238)(0.240)(0.279)(0.093) (0.098) Year dummies yes chi N 1469 a Standard errors in parentheses b Two-tailed t-tests have been used: *p<0.05; **p<0.01; ***p<0.001 Results STEFFEN KEIJL │ TECHNOLOGICAL IMPACT OF INVENTIONS

Conclusions Integrating our results with existing literature on impact  Impact not only depends on specific characteristics of the underlying inventions (e.g. Nemet & Johnson, 2012; Schoenmakers & Duysters, 2010)  In addition, network related factors contribute to the technological impact of inventions

Questions and suggestions… STEFFEN KEIJL │ TECHNOLOGICAL IMPACT OF INVENTIONS