Rosemarie Ham Ziedonis

The Patent Paradox Revisited: An Empirical Study of Patenting in the U.S. Semiconductor Industry, 1979-1995

Methods and apparatus are disclosed for continuous mixing of formulations for urethane products. A hydroxyl mixture and isocyanate, the major foam components, are supplied to a mixer. In the mixer, the components are mixed by transverse shearing and agitation means. The degree of agitation is varied along the length of the mixer, which runs at a constant speed, by varying the shearing pin configuration. The flow path through the mixer is arranged to control pressure on the fluid as well as minimize the tendency of internal foam build-up to occur.

Corporate Venture Capital as a Window on New Technologies: Implications for the Performance of Corporate Investors When Acquiring Startups

Gaining a “window” on new technologies is a prominent motive for corporate venture capital (CVC) investing. Recent studies suggest that information gained through CVC-related activities can improve the internal R&D productivity of established firms. This study investigates an alternative means by which information gained through CVC investing could improve firm performance---by increasing the returns to corporate investors when acquiring startups. We provide new insights based on an event study of the returns to 34 corporate investors from acquiring 242 technology startups. Consistent with predictions drawn from the absorptive capacity literature, we find that the effect of CVC investing on acquisition performance hinges critically on the strength of the acquirers internal knowledge base: as CVC investments increase relative to an acquirers total R&D expenditures, acquisition performance improves at a diminishing rate. We also find that firms consistently engaged in venture financing earn greater returns when acquiring startups than do firms with more sporadic patterns of investing, even controlling for firm profitability, size, and acquisition experience. These findings suggest that corporate investors systematically differ in their abilities to derive added benefits from external venturing as acquirers of entrepreneurial firms.

The effects of strengthening patent rights on firms engaged in cumulative innovation: Insights from the semiconductor industry

During the 1980s, changes in the U.S. legal environment ushered in an era characterized by strong patent rights. This paper examines the effects of this “pro-patent” shift on firms in the semiconductor industry. By conducting interviews with industry representatives and analyzing the patenting behavior of 95 U.S. semiconductor firms during 1979–1995, we find that the strengthening of U.S. patent rights spawned “patent portfolio races” among capital-intensive firms, but also may have facilitated entry by specialized design firms during this period. The results highlight the multifaceted effects of strengthening patent rights on firms within one important cumulative technological setting.

State Governments as Financiers of Technology Startups: Implications for Firm Performance

State governments in the United States often fund and support technology startups within their borders. Yet little is known about the magnitude with which these place-based policy interventions shift the performance trajectories of entrepreneurial firms. We provide new evidence based on 241 startups that compete for advanced research and technology commercialization loans between 2002 and 2008 through a Michigan-based program. Among applicants with project scores near the threshold required for funding, we find that award recipients are 20% to 30% more likely to remain in business four years after the competition relative to similar companies that seek but fail to receive funding. We also find that award receipt stimulates follow-on venture capital (VC) investments in surviving companies. The VC stimulus effect is, however, disproportionately driven by subsets of firms that are very young, relatively inexperienced at external fundraising, or located outside the dominant hub of entrepreneurial activity within the state. This distinctive pattern of heterogeneous effects remains visible for follow-on R&D financing from federal government sources, and for supplemental outcome measures that use news articles to track shifts in financing and business development activities. These findings are consistent with the view that public R&D programs are particularly beneficial when frictions in private resource markets are more severe.

Reprinted Article The patent paradox revisited: an empirical study of patenting in the U.S. semiconductor industry, 1979–1995

We examine the patenting behavior of firms in an industry characterized by rapid technological change and cumulative innovation. Recent survey evidence suggests that semiconductor firms do not rely heavily on patents to appropriate returns to R&D. Yet the propensity of semiconductor firms to patent has risen dramatically since the mid-1980s. We explore this apparent paradox by conducting interviews with industry representatives and analyzing the patenting behavior of 95 U.S. semiconductor firms during 1979–1995. The results suggest that the 1980s strengthening of U.S. patent rights spawned “patent portfolio races” among capital-intensive firms, but it also facilitated entry by specialized design firms.

Intangible but bankable

Young science and technology companies are often rich in intangibles but lack physical assets and cash flows required to secure a loan. Intangibles, such as patents, are effectively “unbankable” for traditional lenders because of international banking regulations. Intangibles also are often

Intellectual property regimes and firm strategy: putting Hall and Ziedonis (2001) in perspective

Scholars of business, economics, and law have long recognized that rights to intellectual property (IP) intimately shape innovative activity and the pursuit of profits. More than 60 years ago, Michal Polanyi voiced the following concerns about awarding property rights to creations of the “intellect”:The law…aims at a purpose which cannot be rationally achieved. It tries to parcel up a stream of creative thought into a series of distinct claims, each of which is to constitute the basis of a separately owned monopoly. But the growth of human knowledge cannot be divided into such sharply circumscribed phases. Ideas usually develop gradually by shades of emphasis, and even when, from time to time, sparks of discovery flare up and suddenly reveal a new understanding, it usually appears that the new idea has been at least partly foreshadowed in previous speculations. (Polanyi, 1944, pp. 70–71)

National Technology Policy in Global Markets

During the late 1980s and early 1990s, U.S. policymakers confronted an unusual combination of political success and economic challenge in the international landscape. As the Cold War waned, competition from firms in industrial and industrializing allies, such as Japan and South Korea, placed severe pressure on U.S. firms in many industries, including the high-technology industries whose early growth had benefited from Cold War-related defense spending. One result of this juxtaposition of events was a series of federal initiatives designed to link the activities of the vast network of federal laboratories, many of which were established as part of the Cold War defense build-up, to the technological needs of industry. The Cooperative Research and Development Agreement (CRADA) was one of the most widely employed vehicles in these initiatives, particularly in the Department of Energy (DoE) laboratory system.