with Ashish Arora, Wesley Cohen and Honggi Lee

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 discriminates between the two explanations. Using a sample of 2,786 public corporations, and measures of both patent quality and patent value, we find that, while average invention value rises with size, average invention quality declines, suggesting, per our model, that the large firm advantage is not due to superior inventive capability, but due to the superior ability to extract value. We provide evidence suggesting that this superior ability to extract value is due to the greater commercialization capabilities of larger firms. 

(job market paper)

Over the last two decades, US firms increased their reliance on overseas inventions. The share of patents generated by US firms with inventors located overseas more than doubled from 8% in 1980 to 18% in 2020. In this paper, I document the private value of overseas inventions. The key challenge in documenting the value of overseas inventions is that innovation projects more suitable to be offshored are likely offshored, and thus, observational measures likely overestimate the true value of overseas inventions. The unobserved characteristics of R&D projects create a potential positive self-selection bias in the estimates. In this paper, I account for this self-selection bias by using a cost shifter based on rejections from the H1-B visa program. Accounting for this self-selection bias enables me to estimate the private cost of restrictions on immigration to US firms. Using measures of the private value of patents based on stock market returns and patent renewals, I find that the value of overseas inventions is lower than those generated in the US. In a generalized Roy model with a cost shifter, I find that inventions with the least unobserved cost of offshoring are the most valuable, evidence of a positive self-selection bias. I will further explore why US firms have increased their reliance on overseas inventions despite the lower private value and which inventions and firms have an advantage from inventing overseas.