Knowledge Assets and Firm Boundaries

Using a novel deal/patent dataset from 1986 through 2005, this paper explores the role of knowledge flow on the firm boundary decision. I use patent self-citations and cross-citations from the United States patent database as a proxy to measure knowledge flow between and within firms. When analyzi...

Full description

Bibliographic Details
Main Author: Stonitsch, Todd
Format: Others
Published: ScholarWorks @ Georgia State University 2014
Subjects:
Online Access:http://scholarworks.gsu.edu/finance_diss/25
http://scholarworks.gsu.edu/cgi/viewcontent.cgi?article=1024&context=finance_diss
Description
Summary:Using a novel deal/patent dataset from 1986 through 2005, this paper explores the role of knowledge flow on the firm boundary decision. I use patent self-citations and cross-citations from the United States patent database as a proxy to measure knowledge flow between and within firms. When analyzing partnerships (strategic alliances and joint ventures), I find that firms with a higher percentage of patent self-citations are more likely to choose a more integrative boundary. Additionally, the level of integration chosen is positively related to the frequency of cross-citations between firms following the formation of the partnership. Firms in partnerships also see higher abnormal returns around the partnership announcement date when their partnering firm has a higher percentage of self-citations. I find weak to no evidence that these results hold for mergers/acquisitions. Overall, the evidence suggests that knowledge assets do play a pivotal role in the firm boundary choice.