We study how the inventive capability of a firm conditions its participation in a division of innovative labor. Capable firms are, by definition, able to invent; for them, external inventions substitute for their own R&D. However, external knowledge is an input into internal invention, and thus,...

Do large firms produce more valuable inventions, and if so, why? After confirming that large firms indeed produce more valuable inventions, we consider two possible sources: a superior ability to invent, or a superior ability to extract value from their inventions. We develop a simple model that...

This paper uses a large language model to develop an ex-ante measure of the commercial potential of scientific findings. In addition to validating the measure against the typical holdout sample, we validate it externally against 1.) the progression of scientific findings through a major...

Using detailed product- and invention-level data from the pharmaceutical industry, we demonstrate that firms with particularly high-selling "blockbuster" products concentrate their development efforts on new products that both target the same customer segments and are more likely to be...

We analyze the effect of patenting on R&D with a model linking a firm's R&D effort with its decision to patent, recognizing that R&D and patenting affect one another and are both driven by many of the same factors. Using survey data for the U.S. manufacturing sector, we estimate the increment to...

Recent accounts suggest the development and commercialization of invention has become more "open." Greater division of labor between inventors and innovators can enhance social welfare through gains from trade and greater economies of specialization. Moreover, this extensive reliance upon...

This paper assesses the validity and accuracy of firms' backward patent citations as a measure of knowledge flows from public research by employing a newly constructed dataset that matches patents to survey data at the level of the R&D lab. Using survey-based measures of the dimensions of...

We examine the impact of individual-level motives upon innovative effort and performance in firms. Drawing from economics and social psychology, we develop a model of the impact of individuals' motives and incentives upon their innovative effort and performance. Using data on over 11,000...

Based on a survey questionnaire administered to 1478 R&D labs in the U.S. manufacturing sector in 1994, we find that firms typically protect the profits due to invention with a range of mechanisms, including patents, secrecy, lead time advantages and the use of complementary marketing and...

Using data from the Federal Trade Commission's Line of Business Program and survey measures of technological opportunity and appropriability conditions, this paper finds that overall firm size has a very small, statistically in- significant effect on business unit R & D intensity when either...