The Importance of Tacit Knowledge: Dynamic Inventor Activity in the Commercialization Phase

32 Pages Posted: 14 Jul 2020 Last revised: 3 Aug 2020

See all articles by Per Botolf Maurseth

Per Botolf Maurseth

BI Norwegian Business School - Department of Economics

Roger Svensson

Research Institute of Industrial Economics (IFN)

Multiple version iconThere are 2 versions of this paper

Date Written: May 28, 2020

Abstract

Inventors generally know more about their inventions than what is written down in patent applications. Because they possess this tacit knowledge, inventors may need to play an active role when patents are commercialized. We build on Arora (1995) and model firm-inventor cooperation in the commercialization of a given invention. Tacit knowledge warrants inventor activity. However, imperfect IPRs may reduce inventors’ incentives to engage in the commercialization process. We analyze when first-best inventor activity is achieved in a two-stage contract. In the empirical part, we analyze when inventor activity is important for the successful commercialization of patents by using a detailed patent database. The database contains unique information on inventor activity, patent commercialization modes and the profitability of commercialization. In the empirical estimations, we find that inventor activity has a strong positive correlation with profitability when a patent is sold or licensed to another firm. When a patent is sold or licensed in the second phase, it is still inventor activity in the first phase that matters for profitability. Thus, our interpretation is that tacit knowledge and close cooperation between inventors and external firms are often crucial for the successful commercialization of patents.

Keywords: Tacit knowledge, inventor activity, patents, commercialization

JEL Classification: O31, O33, O34

Suggested Citation

Maurseth, Per Botolf and Svensson, Roger, The Importance of Tacit Knowledge: Dynamic Inventor Activity in the Commercialization Phase (May 28, 2020). IFN Working Paper No. 1341, Available at SSRN: https://ssrn.com/abstract=3632369 or http://dx.doi.org/10.2139/ssrn.3632369

Per Botolf Maurseth

BI Norwegian Business School - Department of Economics ( email )

Nydalsveien 37
Oslo, 0484
Norway

Roger Svensson (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

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