Using a distance measure to operationalise patent originality

We introduce a distance measure to operationalise Trajtenberg, Henderson, and Jaffe’s [1997. “University Versus Corporate Patents: A Window on the Basicness of Invention.” Economics of Innovation and New Technology 5: 19–50] originality construct (an ex-ante indicator of firms’ technological capabilities). Our measure captures (1) technological diversity, (2) technology distance from patent antecedents, and (3) degree of novelty per each patented innovation. The V-score measure uses the Derwent World Patent Index system to classify technologies hierarchically – making similarities and differences pronounced. Power is gained by using all of the technology-classification codes describing a focal patent’s claims when calculating whether its technology space was incrementally different or radical from those of its antecedent patents (and identifying whether its technology-class code combinations were commonplace at the time when the patent application was made). Our V-score’s prediction of firms’ performance is contrasted with Hall, Jaffe, and Trajtenberg’s [2001. Hall, B. H., A. B. Jaffe, and M. Trajtenberg. 2001. The NBER Patent Citations Data File: Lessons, Insights and Methodological Tools. NBER Working Paper No. 8498] Herfindahl measure of the same originality construct. Results indicate that the distance measure of technological content produces differently signed results when evaluating patents’ performance effects or predicting a firm’s trajectory.