Innovation and value creation: A cross-industry effects study of patent generation

This study examined the relationship between innovation strategy, as represented by assignee patents, and the financial performance of firms traded on stock exchanges in the United States. Building upon previous industry-specific research, this study broadens these investigations to relationships across multiple industries with respect to innovation and value creation. As a basis for examining the aforementioned relationships, this study was based on a framework shaped by Schumpeter's (1934) economic value of innovation theory. This study seeks to answer three research questions: (a) To what degree does innovation and a company's financial performance correlate across different industries, (b) To what degree does innovation strategy for publicly traded mid-capitalized firms and a company's financial performance correlate across different industries, and (c) To what degree does innovation strategy for publicly traded large-capitalized firms and a company's financial performance correlate across different industries? In addressing these questions, the study analyzed secondary data from the United States Patent and Trade Office and company financial data from the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) online system. Regression analysis was conducted to analyze the relationship between company financial data and innovation as a function of patent awards. While no significant relationship was found to exist across a range of financial measures, significance was found for selected measures of mid-capitalized firms over a seven-year period. Recommendations for future research was provided in the conclusions to the study