How does Firm Size Moderate Firms' Ability to Benefit from Invention? Evidence from Patents and Scientific Publications

Using novel firm-level panel data, this paper investigates how firms' ability to benefit from invention is moderated by firm size. We distinguish between output indicators of applied research using patents versus output indicators of basic research using scientific publications in "hard science" journals. Our results show that the relationship between performance and patents is stronger for small firms than for large firms. By contrast, the relationship between performance and scientific publications is stronger for large firms than for small firms. We also investigate several mechanisms that may be responsible for these firm size effects. Cost-spreading, complementary assets and especially large firm's inertia all appear to exert a significant influence on the appropriability of patented research. Conversely, a key role of published research seems to be that of complementing large firms' marketing and sales efforts.