Gauging a Firm's Innovative Performance Using an Integrated Structural Index for Patents

Purpose: In this contribution we try to find new indicators to measure characteristics of a firm's patents and their influence on a company's profits. Design/methodology/approach: We realize that patent evaluation and influence on a company's profits is a complicated issue requiring different perspectives. For this reason we design two types of structural h-indices, derived from the International Patent Classification (IPC). In a case study we apply not only basic statistics but also a nested case-control methodology. Findings: The resulting indicator values based on a large dataset (19,080 patents in total) from the pharmaceutical industry show that the new structural indices are significantly correlated with a firm's profits. Research limitations: The new structural index and the synthetic structural index have just been applied in one case study in the pharmaceutical industry. Practical implications: Our study suggests useful implications for patentometric studies and leads to suggestions for different sized firms to include a healthy research and development (R&D) policy management. The structural h-index can be used to gauge the profits resulting from the innovative performance of a firm's patent portfolio. Originality/value: Traditionally, the breadth and depth of patents of a firm and their citations are considered separately. This approach, however, does not provide an integrated insight in the major characteristics of a firm's patents. The Sh(Y) index, proposed in our investigation, can reflect a firm's innovation activities, its technological breadth, and its influence in an integrated way