Predicting the next ‘big thing’
Predicting the next ‘big thing’
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When it comes to funding research and development projects that lead to groundbreaking inventions — whether initiated by a government agency or a private firm — what if there were a way for managers to know which projects to focus their resources on? And, with so many potential projects competing for limited resources, how should government funding be allocated?
Those were among the questions that drove new research by Rafael Corredoira, an assistant professor in the Department of Management and Human Resources at Fisher, and his colleagues. Their research is the subject of a paper from the journal Research Policy titled "Federal funding and the rate and direction of inventive activity."
The researchers, who received funding from the National Science Foundation, analyzed 4,311 federally funded patents across multiple federal agencies.
“In our research, we discovered that there are cases when federal funding appears to increase the influence of patents."
He notes that federally funded patents tend to have wider applications in a broad range of technologies across the board, which he describes as the patents’ "breadth of applicability." While this is an effect present across agencies and technologies, Corredoira found that the association between federal funding and a patent’s technological influence is positive for some agencies and concentrated in mostly top influence patents. Even more, this relationship is driven by the extramural patents (patents funded by the agency in collaboration with external researchers).
Corredoira collaborated with Brent Goldfarb, associate professor of management and entrepreneurship in the Management and Organization Department, and Yuan Shi, a strategy and entrepreneurship PhD student, both at the University of Maryland’s Robert H. Smith School of Business.
To determine a patent’s influence, the researchers used an “influence variable,” which Corredoira developed for a separate study in 2015. By using the variable, researchers can examine a patent’s influence over different time windows after the patent was granted.
In applying the influence variable to his current research, Corredoira found that among patents with top-20 percent influence after three- and five-year periods, the vast majority of the most influential patents continued to maintain their influence after 10 years, which translates to a top 5-percent influence.
“For example, of 100 patents, among the 20 patents with the most influence over five years, you will find four of the patents with top-five influence in the next 10 years,” Corredoira said. “This knowledge helps you manage your research and determine which projects you should invest in.”
“If you look at the projects you have and at what inventions those projects are building on, and you find that your approach is not building in these top 20 percent of the patents, you’re probably on the wrong technology path. It’s very unlikely that this area will take off.”
This knowledge can be used as an objective measure for firms or government entities as they’re deciding where to focus their research efforts. Additionally, the research demonstrates a new way to guide the selection process that is more difficult to manipulate because it is derived from the actual inventive output of the research community. In turn, this may increase the efficiency of such processes, Corredoira said.
“Once government agencies or firms have investment in research and development projects, they need to decide which ones to move forward and provide additional resources,” he said. “Today, there’s no applicable measure across the board; the rankings become subjective, and sometimes you miss things by only relying on experts, who have their own preferences and biases.”
Corredoira also found that some patent types exert more influence than others.
“Although there are several classifications of technology within patents, there is a significant number of the patents with more influence — where this effect is more salient — that are classified as miscellaneous,” he said. “This suggests that there are areas not necessarily well-developed or that are not the center of much attention of the research community.”
Corredoira notes that this also has implications for a firm’s management team, adding that he views management teams as systems, which behave similarly to innovation systems.
In the creation of inventions, designers build on existing inventions, and in management, leaders build on existing resources — oftentimes on the firm’s existing resources but also on acquired resources. His work on invention inputs shows that pioneering the use of knowledge in an area generates inventions with larger influence on future technology.
Just like an invention that has impact in the long-run, an innovation on a management team can have a long-term effect on a firm’s performance.
“Management’s focus can be on accounting, on marketing, on operations, you name it,” Corredoira said. “But when working with the future in mind, which areas are you going to work on? Which one is going to succeed?
“Knowing the mix and adding novel characteristics to the knowledge you are building on is likely to, in the case of success, generate an innovation or invention with larger influence on the future — innovations or inventions that are more likely to be the seed for great things.”
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