Exploration and Exploitation in US Corporate Research
Doctoral 2017 student ·
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How do firms move through `knowledge space’ as they develop their innovations? We propose a method for tracking patterns of `exploration and exploitation’ in firm patenting behaviour in the US for the period since 1920. Our exploration measure is constructed from the text of patents and involves the use of Bayesian surprise to measure how different current patent-based innovations are from the firm’s existing portfolio. We find evidence of exploration patterns in firm behaviour that are distinct from other potentially correlated aspects of firm performance. We also document a robust association between our exploration measure and firm sales growth.
Economic world