Rosemarie Ziedonis

PUBLICATIONS

Intellectual Property and Firm Strategy

Technology Acquisition and Collaboration

Articles Currently Under Review Other Working Papers and Works-in-Progress

Intellectual Property and Firm Strategy

Agarwal, R., M. Ganco, and R.H. Ziedonis, "Reputations for Toughness in Patent Enforcement: Implications for Knowledge Spillovers via Inventor Mobility," Strategic Management Journal, forthcoming

"Job hopping" by scientists and engineers is an important channel for knowledge diffusion. Little is known, however, about the effectiveness of actions firms take to reduce the outward flow of know-how and talent from their own organizations. Building on theories of reputation-building and strategic deterrence, this study investigates the moderating effects of corporate reputations for "toughness" in the enforcement of patents. Drawing on a unique database of enforcement activity, inter-firm inventor mobility events, and patent citations in the U.S. semiconductor industry, we find that a firm's litigiousness significantly curtails the dissemination of knowledge anticipated from employee departures, particularly to firms that are relatively disadvantaged to fund or withstand a legal dispute (i.e., that are small, young, or private). The overall effects are similar in magnitude for California-based firms relative to firms headquartered in other states. The study sheds new light on the strategic levers firms use to capture value from investments in human capital and R&D

Ziedonis, R.H.  "Intellectual Property Regimes and Firm Strategy: Putting Hall and Ziedonis (2001) in Perspective," in J. Nickerson and B. Silverman, Economic Institution of Strategy, Advances in Strategic Management, 26: 313-340, 2009.

A new book edited by Jackson Nickerson (Wash U, St. Louis) and Brian Silverman (Toronto) reviews advances in research on the Economic Institutions of Strategy.  My “patent paradox” article with Bronwyn Hall (Rand Journal of Economics, 2001) is reprinted in the book.  Combining qualitative and quantitative methods, our study examined the strategic response of semiconductor firms to a “pro-patent” shift in the institutional environment. In this companion piece, I discuss factors that facilitated the study’s completion, review methodological problems we encountered, and identify questions left unaddressed by our work. The chapter is targeted toward doctoral students and faculty interested in innovation, institutional change, or the strategic value and use of intellectual property.

Ziedonis, R.H. "On the Apparent Failure of Patents: A Response to Bessen and Meurer," Academy of Management Perspectives, 20(4): 21-29, 2008.

This article is in response to the lead article from the August issue's Exchange section, which addressed the link between patents and innovation. "Do Patents Perform Like Property?" by James Bessen and Michael J. Meurer, appeared on pages 8 through 20 of the issue. I discuss why the article is important to scholars of innovation and policymakers; The authors allow firms to play dual roles as patent owners and potential defendants in patent infringement lawsuits and estimate that during the 1990s public firms in many sectors lost greater value from lawsuits filed against them than they earned from owning patents. In the article, I explain why one should resist the temptation to conclude, as the authors assert, that public firms in these sectors would be "better off" in a world without patents.

Hsu, D. and R.H. Ziedonis, Patents as Quality Signals for Entrepreneurial Ventures,  Academy of Management Best Paper Proceedings, 2008.

This study investigates the extent to which, if at all, patents reduce the information gap between innovation-intensive startups and suppliers of equity-based financial capital-a vital resource required for the growth and survival of new firms. Prior studies suggest that patenting activities can convey information to capital providers about the quality of a firm's technological capabilities. Empirical evidence nonetheless remains limited and largely confined to late stages of development-when entrepreneurs and their investors seek financing in initial public offerings (IPO). This study provides new insights by exploring the relative efficacy of patents as quality signals in both pre-IPO and IPO environments. Building on insights from resource-based and signaling theories, we predict that the signaling function of patents will be particularly important in early financing rounds and for startups that lack alternative means by which to convey their quality credibly to outsiders. We test these predictions by tracing the patenting and financing activities of 370 venture-backed semiconductor startups across multiple stages of their development. The study sheds new light on the strategic value of patents as resources for entrepreneurial firms.

Ziedonis, R.H., 2008. "Intellectual Property and Innovation," in S. Shane, ed., Blackwell Handbook on Technology and Innovation Management. Oxford, UK: Blackwell Publishing.

This chapter discusses recent advances in the literature on intellectual property (IP) and innovation, particularly as they inform research by management scholars. Evidence from 19 peer-reviewed journals suggests that academic interest in IP has grown considerably over the past two decades. Using a subset of highly cited papers as a guide, three prominent themes are identified and discussed: (1) the use of patent data as a "paper trail" with which to trace innovative activity; (2) the value of IP as a strategic asset (thus shifting attention to its accumulation and use); and (3) the effects of IP as a policy lever. This chapter discusses selected papers in these areas and highlights their implications for research in technology and innovation management, strategy, and entrepreneurship.

Ziedonis, R.H. 2004. "Don't Fence Me In: Fragmented Markets for Technology and the Patent Acquisition Strategies of Firms." Management Science, 50(6): 804-820:

This paper examines the conditions under which firms patent defensively to avoid being "fenced in" by owners of technologies used, perhaps unknowingly, in the design or manufacture of their products. Combining insights from transaction cost theory with recent scholarship on intellectual property, I predict firms will patent more aggressively than otherwise expected when markets for technology are highly fragmented (i.e., ownership rights to external technologies are widely distributed); this effect should be more pronounced for firms with large investments in technology-specific assets and under a strong legal appropriability regime. Although these characteristics of firms and their external environments have been highlighted in the theoretical literature, prior research has not explored the extent to which such factors interact to shape the patenting behavior of firms. To empirically test these hypotheses, I develop a citations-based "fragmentation index" and estimate the determinants of patenting for 67 U.S. semiconductor firms during 1980-1994. Accumulating exclusionary rights of their own may enable firms to safeguard their investments in new technologies while foregoing some of the costs and delays associated with ex ante contracting.

Link to online data appendix

Ziedonis, R.H. 2003. "Patent Litigation in the US Semiconductor Industry," in Patents in the Knowledge-Based Economy," W.A. Cohen and S.A. Merrill, eds., (Washington, D.C., National Academies Press).

In this paper, I trace patterns of patent litigation for 137 US semiconductor firms during 1973-2001. The chapter, which is part of a series of studies on the operation of the US patent system commissioned by the Board on Science, Technology, and Economic Policy of the National Academies, reports the descriptive findings from the research. Three main findings emerge: First, the incidence of patent litigation has increased in this industrytin line with broader trends revealed in other studies. More surprising is the active enforcement of patent rights by small firms within the industry. My results suggest that this high propensity of small firms to be involved in patent-related lawsuits stems less from the bargaining disadvantages they face due to small patent portfolios (as interpreted in prior research) and more from the fact that many small firms within the industry are "technology specialists" for whom exclusionary control over proprietary technologies is particularly important. Consistent with this view, I find that specialized "fabless" firms enforce on average 4 out of every 100 patents they own-a remarkably high litigation rate that resembles rates reported for specialized biotechnology firms. The chapter discusses these findings and also reveals what appears to be an active "market" for patents that pre-dates the filing of a lawsuit: In at least 30 percent of the cases identified, legal title to a litigated patent had been reassigned from the original inventor (or assignee) to one of the litigating parties-typically the plaintiff in a patent infringement suit.

Hall, B.H. and R.H. Ziedonis, 2001. "The Patent Paradox Revisited: An Empirical Study of Patenting in the US Semiconductor Industry, 1979-95," Rand Journal of Economics, 32(1): 101-128; Reprinted in J. Cantwell, ed., The International Library of Critical Writings in Economics: The Economics of Patents. (UK: Edward Elgar Publishing Ltd, 2006).

Reprinted in:

We examine the patenting behavior of firms in an industry characterized by rapid technological change and cumulative innovation. Recent survey evidence suggests that semiconductor firms do not rely heavily on patents to appropriate returns to R&D. Yet the propensity of semiconductor firms to patent has risen dramatically since the mid-1980s. We explore this apparent paradox by conducting interviews with industry representatives and analyzing the patenting behavior of 95 US semiconductor firms during 1979-95. The results suggest that the 1980s strengthening of US patent rights spawned "patent portfolio races" among capital-intensive firms, but also facilitated entry by specialized design firms.

Ziedonis, R.H. and B.H. Hall, 2001. "The Effects of Strengthening Patent Rights on Firms Engaged in Cumulative Innovation: Insights from the Semiconductor Industry," in Entrepreneurial Inputs and Outcomes: New Studies of Entrepreneurship in the United States (Advances in the Study of Entrepreneurship, Innovation, and Economic Growth), vol. 13, G.D. Libecap, ed. (UK: Elsevier Science Ltd)

This chapter is a longer version of our "Patent Paradox" article published in RAND. We discuss the institutional shift in the US patent system and our interview results at greater length and provide additional empirical results that are referred to but not presented in the journal article. An appendix provides additional information about the sample firms and discusses some of the methodological trade-offs involved in the study.

John, K.E., E. Sirois, M. Park, T. Winston, and R.M. Ham, "Benefits of Teamwork in a Mail Survey of U.S. Firms on Patent Protection: A Coordinated Methodological Approach," in Proceedings of the International Conference on Establishment Surveys, American Statistical Association, 1993

At the request of Senators John D. Rockefeller IV, Dennis DeConcini, and Lloyd Benson, we reviewed patent protection for U.S. products in Japan as compared with that in the United States and Europe. To investigate theses issues, we sent a mail survey to 346 U.S.-based companies in 1992 and received an unusually high response rate of 87 percent. The results of the study are discussed in a 1993 report by the U.S. General Accounting Office, titled "Intellectual Property Rights: U.S. Companies' Patent Experiences in Japan." Our article discusses the iterative, team-based approach we used to conduct the survey, which we believed contributed to the survey's successful implementation.


The Acquisition and Use of External Technologies

Benson, D. and R.H. Ziedonis, "Corporate Venture Capital and the Returns to Acquiring Portfolio Companies," The Journal of Financial Economics, forthcoming.

A prominent motive for corporate venture capital (CVC) is the identification of entrepreneurial-firm acquisition opportunities. Consistent with this view, we find that one of every five startups purchased by 61 top corporate investors from 1987 through 2003 is a venture portfolio company of its acquirer. Surprisingly, our analysis reveals that takeovers of portfolio companies destroy significant value for shareholders of acquisitive CVC investors, even though these same investors are “good acquirers” of other entrepreneurial firms. We explore numerous explanations for these puzzling findings, which seem rooted in managerial overconfidence or agency problems at the program level.

Benson, D. and R.H. Ziedonis, "Corporate Venture Capital as a Window on New Technologies: Implications for the Performance of Corporate Investors When Acquiring Startups," Organization Science, 20(2): 329-351, 2009

Gaining a "window" on new technologies is a prominent motive for corporate venture capital (CVC) investing. Recent studies suggest that information gained through CVC-related activities can improve the internal R&D productivity of established firms. This study investigates an alternative means by which information gained through CVC investing could improve firm performance-by increasing the returns to corporate investors when acquiring startups. We provide new insights based on an event study of the returns to 34 corporate investors from acquiring 242 technology startups. Consistent with predictions drawn from the absorptive capacity literature, we find that the effect of CVC investing on acquisition performance hinges critically on the strength of the acquirer's internal knowledge base: as CVC investments increase relative to an acquirer's total R&D expenditures, acquisition performance improves although at a diminishing rate. We also find that firms consistently engaged in venture financing earn greater returns when acquiring startups than do firms with more sporadic patterns of investing, even controlling for firm profitability, size, and acquisition experience. These findings suggest that corporate investors systematically differ in their abilities to derive added benefits from external venturing as acquirers of entrepreneurial firms.

Linden, G., D.C. Mowery, and R.H. Ziedonis, 2000. "National Technology Policy in Global Markets: Developing Next-Generation Lithography in the Semiconductor Industry," Business and Politics; reprinted in M. Feldman and A.N. Link, eds., Science and Technology in the 21st Century: Toward a Global Policy Agenda (Norwell, Massachusetts: Kluwer Academic Publishers, 2001).

Since the late 1980s, the Cooperative Research and Development Agreement (CRADA) has been a prominent vehicle used to support collaboration between US federal laboratories and private firms. In this paper, we examine the structure and goals of one of the most ambitious CRADAs conducted to date, which is aimed at the development of next-generation lithographic technologies and involves three Department of Energy laboratories and leading US firms in the semiconductor industry. This large project is an important case study in "post-Cold-War" technology policy and government-industry collaboration. Although the EUV project represents significant improvements in the design and management of CRADAs, it also illustrates the inherent difficulties of balancing political and economic goals in complex technology development projects.

Ham, R.M., G. Linden, and M.M. Appleyard, 1998. "The Evolving Role of Semiconductor Consortia in the United States and Japan," California Management Review 41: 137-163.

This paper examines a new chapter in the history of large-scale semiconductor consortia in the United States and Japan. By focusing on two recently established consortia-the International 300mm Initiative (I300I) in the United States and Semiconductor Leading Edge Technologies, Inc (Selete)-we examine the changing role of governments and private firms in directing technology development in the semiconductor industry. Both I300I and Selete have been financed solely by member companies and are working with a global base of supplier firms, apparently heralding a sea change in relations between the semiconductor industry and national governments. We examine the factors that gave rise to these consortia-namely, the costly conversion to larger silicon wafers that alters many of the industry's manufacturing technologies. We discuss the origins and structures of each organization and the unprecedented level of cooperation among leading semiconductor manufacturers that is taking place.

Ham, R.M. and D.C. Mowery, 1998. "Improving the Effectiveness of Public-Private R&D Collaboration: Case Studies at a US Weapons Laboratory," Research Policy 26: 661-675; An earlier commentary based on this research was published as: Ham, R.M. and D.C. Mowery, 1995. "Improving Industry-Government Cooperative R&D," Issues in Science and Technology (Summer): 67-73.

We present the results of the first systematic cases studies of Cooperative Research and Development Agreements (CRADAs) between private firms and one of the large US weapons laboratories, Lawrence Livermore National Laboratory (LLNL). The cases cover a diverse array of technologies and include firms that range considerably in size and internal R&D capabilities. Our study suggests that these collaborative agreements are most effective for projects that that draw on the historic missions and capabilities of the labs, rather than for ones focusing on civilian technologies with little relevance to these missions. We identify four areas that could improve the effectiveness of these public-private R&D collaborations and illustrate how evaluations of CRADAs that rely on quantitative estimates in the immediate aftermath of their completion can be unreliable and misguided.

Ham, R.M. and D.C. Mowery, 1997. "Technology Collaboration Between Industry and National Laboratories: The Importance of Project Structure and Management," International Journal of Industrial Engineering. Special Issue: Technology Transfer 4(4): 244-253.

In this paper, we discuss the structure and management of collaborative technology agreements between private firms and government laboratories. Our discussion is based on five R&D agreements, which we trace over two-year period. The case studies illuminate several factors that facilitate the successful completion of these projects, including selecting R&D projects of sufficient size to attract internal talent within the labs, ensuring that strong "project champions" exist within both the government and private sector partners, and complementing contracts governing intellectual property rights with mechanisms aimed at modifying and transferring the underlying technologies.

Ham, R.M. and D.C. Mowery, 1995. "Enduring Dilemmas in U.S. Technology Policy," California Management Review 37:4; reprinted in G. Koopman and H. Scharrer, eds., The Economics of High Technology Competition and Cooperation in Global Markets. (Hamburg, Germany: HWWA - Institut für Wirtschaftsforschung, 1996); published in French as "La politique technologique de Clinton," Politique Etrangere 4: 991 - 1004, 1995.)

This paper examines US policies aimed at stimulating the development and commercialization of technologies by firms. We argue that the global nature of competition in many sectors and the web of cross-border alliances among firms from different countries pose enduring challenges for US policies aimed at garnering domestic benefits. After discussing US policies aimed at strengthening intellectual property rights and stimulating the commercialization of technologies developed in government labs, we assess two prominent initiatives of the Clinton Administration - the flat-panel display initiative and the promotion of projection x-ray photolithography technology.