To patent or not to patent? An innovation-level investigation of the propensity to patent: Master's thesis

Iiro Mäkinen

Research output: Book/ReportBook (author)Scientificpeer-review


This study seeks to shed new light on the complex relationship between patents and innovations that has remained extremely elusive thus far. The objective of the study is to contribute to our understanding of which innovations are patented-and which are not-by analyzing the patenting decision for circa 800 Finnish innovations. The data is drawn from the Sfinno database compiled at VTT Innovation Studies. With the help of econometric methods, the study seeks to shed new light on the question of how the propensity to patent an innovation is affected by the characteristics of the innovation, the market, and the innovating firm. The results should be of obvious interest to those who depend on patent data in drawing conclusions about innovation and technological change. The finding that larger, i.e. more novel and significant, product innovations are patented more frequently than smaller ones should be comforting news from the perspective of using patents as an economic indicator of innovation since it implies that large innovations enter the patent indicator at a relatively high probability. However, the study also points to the weaknesses of patent data by demonstrating that the propensity to patent varies significantly across firms and technologies. For instance, the evidence in favor of the hypotheses on the presence of economies of scale in the patenting activity and on the relatively high propensities to patent in start-up ventures suggests that patents are a rather problematic measure of innovations in the context of testing the Schumpeterian hypotheses.
Original languageEnglish
Place of PublicationEspoo
PublisherVTT Technical Research Centre of Finland
Number of pages118
ISBN (Electronic)978-951-38-7030-0
ISBN (Print)978-951-38-7029-4
Publication statusPublished - 2007
MoE publication typeC1 Separate scientific books

Publication series

SeriesVTT Publications


  • patents
  • innovations
  • patenting
  • econometric analysis
  • propensity
  • models
  • estimation
  • testing
  • Sfinno
  • product innovations


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