Breadth and RETech (Text-based)
contributors: Donald Bowen, Laurent Fresard, Gerard Hoberg
tags: patents, breakthrough, evolution, waves, productivity
description: Patent-level variables that provide researchers a new way to characterize innovation within public firms, startups, places and more. Importantly, they are distinct from existing measures and do not have look-ahead bias: they only use information available in the patent itself. RETech is higher for patents related to waves of innovation.
last edit: Mon, 19 Jun 2023 16:46:46 GMT
The variables provided here are based on the text in the section of patents describing the innovation. They provide researchers a new way to characterize innovation within public firms, startups, places and more. Importantly, they are distinct from existing measures and do not have look-ahead bias: they only use information available in the patent itself.
"RETech" (rapidly evolving technology) measures whether the patent pertains to a technological area that is rapidly evolving (i.e., following breakthroughs) or stable. Higher levels of our measure detects patents in new areas and those in subsequent waves of development. High RETech patents substitute for existing technologies rather than complement them, receive more citations and get higher stock market reactions. Among measures without look-ahead bias, RETech has the strongest association with notable breakthrough patents (like lasers, DNA modifications, satellites, Google's PageRank, and more).
"Tech Breadth" measures how much (or little) the patent's text is spread across technological fields. Patents with low levels of breadth (i.e. 0) are niche and can be understood by scientists familiar with a single field of study. High values of breadth indicate that the patent imbues ideas from many fields and will likely require teams with diverse knowledge to implement. Low breadth patents are more redeployable and complementary to the technology stacks outside the inventing firm.