Patent applications and subsequent changes of performance: evidence from time-series cross-section analyses on the firm level

This article examines the relationship between patent applications and subsequent changes of company performance. Time-series cross-section data from 50 German machine tool manufacturers between 1984 and 1992 are used to perform panel analyses. It is shown that national patent applications lead to sales increases with a time-lag of 2 to 3 years after the priority year. European patent applications, which are of higher quality than national patent applications, have an even higher impact on sales increases with a lag of 3 years after the priority year. These results lend support to the use of patent data as an output indicator of R&D activities for business applications as well as empirical research. (C) 2001 Elsevier Science B.V. All rights reserved.