Inventions, Commercialization Strategies and Knowledge Spillovers in SMEs

Despite the comprehensive previous research on different aspects of inventions and externalities spanning both the micro and macro levels, no prior studies have, to our knowledge, examined the relationship between the commercialization strategies of inventions/patents and social knowledge spillovers. To bridge this gap in the literature, we examine how such spillovers, measured as forward citations, covary with four commercialization modes: 1) setting up a new firm, 2) commercialization within an existing firm where the inventor either is employed or 3) has an ownership stake, and 4) licensing/selling patents to other firms. Alternatively, an inventor may refrain from commercialization. Utilizing unique survey data on patents owned by small and medium-sized enterprises and individuals, we provide evidence that commercialization through licensing/selling is the most efficient way of generating knowledge diffusion. We also find some support for new ventures being an important source of knowledge spillovers.