TY - CHAP
T1 - The Effect of Innovative Activity on Firm Performance
T2 - The Experience of Taiwan
AU - Anandarajan, Asokan
AU - Chin, Chen Lung
AU - Chi, Hsin Yi
AU - Lee, Picheng
N1 - Copyright:
Copyright 2007 Elsevier B.V., All rights reserved.
PY - 2007
Y1 - 2007
N2 - Firm performance is, among other factors, a function of tangible and intangible assets that the firm possesses and utilizes to maximize value. While research has examined the impact of advertising and R&D on firm performance, in this chapter we, in addition, examine the extent of innovation as measured by patents granted on firm performance. Our findings indicate that overall, innovative activity as measured by number of patents granted, significantly influences firm performance as measured by Tobin's q. Hence patenting activity is value relevant to investors. Further, this relationship is more pronounced when the patents are granted in the United States. We conclude that markets tend to give greater credence to innovative activity when patents are granted to foreign firms by the U.S. Patenting Office. Finally, the stage of the product in the industry chain moderates the influence of patenting activity on firm performance. When patents are granted in the design stage the impact on firm performance is stronger relative to when patents are granted in the manufacturing and packaging and testing stages. The evidence indicates that patents by companies in the manufacturing end of the chain have a more pronounced impact on firm performance relative to patents granted in the packaging and testing stage.
AB - Firm performance is, among other factors, a function of tangible and intangible assets that the firm possesses and utilizes to maximize value. While research has examined the impact of advertising and R&D on firm performance, in this chapter we, in addition, examine the extent of innovation as measured by patents granted on firm performance. Our findings indicate that overall, innovative activity as measured by number of patents granted, significantly influences firm performance as measured by Tobin's q. Hence patenting activity is value relevant to investors. Further, this relationship is more pronounced when the patents are granted in the United States. We conclude that markets tend to give greater credence to innovative activity when patents are granted to foreign firms by the U.S. Patenting Office. Finally, the stage of the product in the industry chain moderates the influence of patenting activity on firm performance. When patents are granted in the design stage the impact on firm performance is stronger relative to when patents are granted in the manufacturing and packaging and testing stages. The evidence indicates that patents by companies in the manufacturing end of the chain have a more pronounced impact on firm performance relative to patents granted in the packaging and testing stage.
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U2 - 10.1016/S0882-6110(07)23001-9
DO - 10.1016/S0882-6110(07)23001-9
M3 - Chapter
AN - SCOPUS:34648830421
SN - 0762314257
SN - 9780762314256
T3 - Advances in Accounting
SP - 1
EP - 30
BT - Advances in Accounting
A2 - Reckers, Philip
A2 - Iyer, Govind
A2 - Carmona, Salvador
A2 - Johnson, Eric
A2 - Margheim, Loren
A2 - Morton, Richard
ER -