Title: Supply and demand determinants of startup patents

Authors: Bernadette Power; Gavin C. Reid

Addresses: Department of Economics, Cork University Business School, University College Cork, Cork, Ireland ' Centre for Business Research, Cambridge Judge Business School, University of Cambridge, Trumpington Street, Cambridge, CB2 1AG, UK; School of Economics and Finance, University of St. Andrews, St. Salvator's College, St. Andrews, Fife, Scotland, KY16 9AL, UK

Abstract: This paper estimates simultaneously the supply and demand determinants of patent adoption by start-ups. It uses a partial observability bivariate probit model because the non-adoption outcome of the patent decision is unobserved. Econometric estimation of this model is undertaken on Kauffman Foundation start-up data, using a large representative unbalanced panel, collected by web survey and telephone interviews. This model is found to be robust. It challenges the view that patenting is either exclusively demand-side or supply-side determined. Instead, it provides a good joint explanation of supply and demand determinants of patent adoption in startups, emphasising the importance of sectoral choice, R&D spend, and competitive advantage on the supply-side; and complementary IP (e.g., trademarks, licensing-out), and venture capital, on the demand-side. Brief policy implications are drawn out.

Keywords: patent adoption; start-ups; intellectual property; partial observability bivariate probit; POBP; R&D spend; competitive advantage; venture capital.

DOI: 10.1504/IJIPM.2024.138312

International Journal of Intellectual Property Management, 2024 Vol.14 No.3, pp.217 - 241

Received: 10 Feb 2022
Accepted: 11 Oct 2022
Published online: 01 May 2024 *

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