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Knowledge flows from business method software patents: influence of firms’ global social networks

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Abstract

Using patent citations as an indicator of knowledge flows, this paper examines the effects of firms’ global patent social networks on knowledge flows from business method software patents. Patent social networks are considered along several dimensions, including relative centrality, structural equivalence and brokerage roles. Identifying 19,385 software patents applications to the USPTO by 37 countries during 1995–2012, results show that firms positioned with a relative centrality or situated within the same structural equivalent cluster have more citations to their counterpart firms’ patents. Further, among the different brokerage roles, we find positive promotion to knowledge transfer when the citing and cited firms both serve the role of an itinerant as well as that of a gatekeeper/representative, while firms that act as gatekeeper/representative (alone) cite less patents from firms that do not enact this kind of a role. These unique insights provide a better understanding of channels of knowledge transmission and have implications for the pace of technological change.

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Notes

  1. Whereas we focus on knowledge flows in the formal markets, there might also be spillovers of knowledge to informal markets (see Goel and Nelson 2009; Goel et al. 2016).

  2. Business method software deals with a broad spectrum of data processing applications.

  3. U.S. Patent and Trademark Office, USPTO Patent Statistics, Patent Counts by Class by Year Report (www.uspto.gov).

  4. Although the U.S. Supreme Court decision in Alice Corporation Pty. Ltd. versus CLS Bank International, decided on 19 June 2014, has had a significant impact in the field of “software patents”, particularly those covering financial and business-related processes, it is still observed that significant numbers of business method patents continue to be applied for in USPTO and in jurisdictions outside the U.S.

  5. This is by no means an exhaustive list and scholars regularly examine new dimensions. For instance, an interesting work by Link and Ruhm (2013) considers the inter-generational dimension of patenting where patenting behavior is affected by the patenting behavior of fathers.

  6. Patents containing “antigen”, “antigenic”, or “chromatography” in the description/specification were also excluded.

  7. The search algorithm is summarized as the follows: “software” OR “methods” AND “program” AND NOT “chip” OR “semiconductor” OR “bus” OR “circuit” OR “circuitry” OR “device” OR “apparatus”. Further details are available upon request.

  8. See Gould and Fernandez (1989).

  9. There are a variety of software tools that have been developed for social network analysis. The most popular software packages include Pajek, UCINET 6, NetDraw, Gephi, E-Net, KeyPlayer 1, StOCNET and Automap. We employ Pajek in this study because it has efficient algorithms for analyzing large networks in addition to its powerful visualization function(s). See Apostolato (2013) for an overview of software applications for social network analysis.

  10. PATSTAT, also known as the EPO Worldwide Patent Statistical Database, is a snapshot of the EPO master documentation database (DOCDB) with worldwide coverage, covering more than 20 tables with bibliographic data of about 70 million for the patents issued by most of the patent institutes in the world. See http://www.epo.org/searching/subscription/raw/product-14-24.html.

  11. To save space, we only list top 30 firms with the highest values for betweenness centrality, itinerant and gatekeeper/representative, respectively. The values for the full sample are available upon request.

  12. The correlation between RelBetwij, the relative centrality, and Itineri and Itinerj, the itinerant of citing firm and cited firm is rather high (additional details are available upon request); therefore, we conduct estimations separately from columns II to IV, and from columns V to VII to investigate the effects of relative centrality and brokerage, respectively.

  13. Graf and Kruger (2011) note that gatekeepers might exert positive spillovers on the innovation network.

  14. An exception is the case of Gateki × Gatekj, which is now significantly negative (column VII).

  15. One should, however, keep in mind the intermediate good nature of business software. Thus, its overall value is related to the value of the finished product/service that it is tied to. For instance, in an endogenous growth model setup, Yamamoto (2003) notes the importance of transportation costs of the intermediate good, whereby high transportation costs inhibit growth. Software, however, does not suffer from such limitations as it can be relatively efficiently transmitted via the internet.

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Acknowledgements

We would like to thank Al Link for numerous useful comments and suggestions.

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Correspondence to Rajeev K. Goel.

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Jiang, J., Goel, R.K. & Zhang, X. Knowledge flows from business method software patents: influence of firms’ global social networks. J Technol Transf 44, 1070–1096 (2019). https://doi.org/10.1007/s10961-017-9645-1

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