Exploration and Exploitation in US Technological Change

How do firms and inventors move through knowledge space as they develop their innovations? We propose a method for tracking patterns of exploration and exploitation in patenting behaviour in the US for the period since 1920. Our exploration measure is constructed from the text of patents and involves the use of Bayesian Surprise to measure how different current patent-based innovations are from existing portfolios. Our results indicate that there are distinct life-cycle patterns to firm and inventor exploration. Furthermore, exploration activity is more geographically concentrated than general patenting, but this concentration is centred outside the main hubs of patenting