The Value of Knowledge Spillovers

The goal of this study is to quantify theeconomic value of knowledge spillovers by considering firm-level data onpatents, patent citations, research and development (R&D), and firm values.After a discussion of the relationship between patent citations and knowledgespillovers, a market value equation for semiconductor firms during the 1980sand 1990s is estimated. This model estimation is accompanied by an empiricalestimation based on data on the patent citations of 120 semiconductor firmspublicly traded in the United States between 1979 and 1998. Findings indicate that the total value of knowledge spillovers received bythe average firm could be as high as half of its actual total R&Dinvestment during the same period. Results also suggest that the value ofcitations declines when the size of the firm's patent portfolio increases andthat citations are more valuable for firms entering the semiconductor industryafter 1982. The fact that self citations are found to be substantially morevaluable than external citations suggests that a substantial amount of tacitknowledge takes place within the same firm. (SAA)