Commercialization of Patents and External Financing During the R&D-Phase

36 Pages Posted: 30 Sep 2007 Last revised: 22 Jun 2020

See all articles by Roger Svensson

Roger Svensson

Research Institute of Industrial Economics (IFN)

Multiple version iconThere are 2 versions of this paper

Date Written: March 1, 2007


Using a unique database on Swedish patents owned by small firms and individuals, survival models estimate how different factors influence the decision to commercialize the patents. Such an analysis has seemingly never previously been undertaken. Since the owners know more about the patents than potential external financiers, problems related to asymmetrical information are present. To overcome these problems when inventors and small technology-based firms need financing, Sweden has for a long time relied on government support rather than private venture capital firms. The empirical results show that the larger is the share of patent-owners’ costs covered by government financial support during the R&D phase, the lower is the probability of patents being commercialized. This lower degree of commercialization is likely to depend on: 1) the soft terms of the government loans, where the patent owner can avoid paying back the loan if the patent is never commercialized; and/or 2) that the government is not able to select promising projects. The first explanation is related to moral hazard and the second one to adverse selection. The policy suggestion is for government to change the design of the loans, to base them on firms rather than projects.

Keywords: patents, R&D, commercialization, external financing, survival models

JEL Classification: O31, O38, G30, M13

Suggested Citation

Svensson, Roger, Commercialization of Patents and External Financing During the R&D-Phase (March 1, 2007). Research Policy, Vol. 36(7), pp. 1052-69, 2007, IFN Working Paper No. 624, Available at SSRN: or

Roger Svensson (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
+46-8-6654549 (Phone)
+46-8-6654599 (Fax)


Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics