Scope versus speed: Team diversity, leader experience, and patenting outcomes for firms

• Date: 01 April 2018
• Published date: 01 April 2018
• DOI: http://doi.org/10.1002/smj.2753

RESEARCH ARTICLE

Scope versus speed: Team diversity, leader

experience, and patenting outcomes for firms

Prithwiraj Choudhury

1

| Martine R. Haas

2

1

TOM Unit, Harvard Business School, Boston,

Massachusetts

2

Management Department, The Wharton School,

University of Pennsylvania, Philadelphia,

Pennsylvania

Correspondence

Martine R. Haas, The Wharton School, University

of Pennsylvania, 3620 Locust Walk, Philadelphia,

PA 19104.

Email: mrhaas@wharton.upenn.edu

Research Summary:How does the organization of

patenting activity affect a firm’s patenting outcomes? We

investigate how the composition of patenting teams

relates to both the scope of their patent applications and

the speed with which their patents are approved, by

examining the main effects of team members’intra-

organizational diversity (based on affiliations with formal

organizational units and informal organizational commu-

nities) and the moderating effects of team leader experi-

ence. We test our moderated mediation model in a

sample of 121 teams that filed patents in a Fortune

50 company’s India R&D center between 2005 and 2015,

using proprietary employee data combined with newly

released micro-data from the U.S Patent and Trademark

Office (USPTO). Our findings illuminate the micro-

foundations of innovation in firms by highlighting a

trade-off between organizing patenting activity to maxi-

mize scope versus speed.

Managerial Summary:Patenting is an important strategic

tool that firms can use to protect and create value from

their innovations. A firm can benefit from filing a patent

application that gives it a wider possible set of claims

related to an innovation. It can also benefit from faster

approval of a patent application by the Patent Office.

However, our study shows that there is a trade-off

between patent application scope and patent approval

speed, which creates tensions for the organization of

patenting activities inside firms. In particular, we find that

the diversity of a patenting team is positively related to

patent scope but negatively related to patenting speed,

and that these relationships vary with the experience of

the team leader.

Both authors contributed equally to this article; names are listed alphabetically.

Received: 4 April 2016 Revised and accepted: 17 November 2017 Published on: 20 February 2018

DOI: 10.1002/smj.2753

Strat Mgmt J. 2018;39:977–1002. wileyonlinelibrary.com/journal/smj Copyright © 2017 John Wiley & Sons, Ltd. 977

KEYWORDS

micro-foundations of innovation, patent scope,

patenting speed, team diversity, team leader experience,

within-firm data

1|INTRODUCTION

Patenting is central to innovation in many industries, including information technology, telecoms,

automotive, pharmaceuticals, biotechnology, aerospace, oil and gas, and more. Strategy research

often views a firm’s level of patenting activity as a measure of its innovativeness (e.g., Hall, Jaffe, &

Trajtenberg, 2005; Henderson & Cockburn, 1994), yet patenting is more than a convenient measure

of innovation output. In many industries, patenting is a key source of competitive advantage because

patents enable firms to fend off competitors and capture the value of their innovations (Kitch, 1977;

Spender & Grant, 1996). The potential strategic value of patenting suggests that it is important to

understand how patents are generated by firms. This raises a question that has been little explored to

date: How does the organization of patenting activity within a firm affect its patenting outcomes?

Scholars have long recognized that much innovation within firms is driven by bottom-up actions

of front-line employees (e.g., Bower, 1970; Burgelman, 1983), who identify technical problems to

be solved, develop solutions, and champion those solutions (cf. Cyert & March, 1963). Beyond such

general insights, however, the micro-foundations of innovative activities like patenting are poorly

understood (Felin & Foss, 2005; Foss & Pedersen, 2014). To advance understanding of these micro-

foundations, we examine how the composition of patenting teams within a firm relates to the firm’s

patenting outcomes. We focus on teams because large-scale cross-industry studies have shown that

patenting is increasingly team-based (e.g., Singh & Fleming, 2010; Wuchty, Jones, & Uzzi, 2007).

Within firms, patenting teams can vary considerably in how they are composed, depending on the

characteristics of the members as well as the characteristics of the leaders (i.e., lead inventors).

Given this, we investigate how both the membership and leadership of patenting teams relate to

patenting outcomes that have potential strategic value for the firm.

In particular, we examine two patenting outcomes that are closely connected to a firm’s ability to

capture value from its innovations: patent scope and patenting speed. Firms can benefit from greater

patent scope—that is, a patent that covers more of the inventive space—because greater patent scope

enables firms to protect and defend more territory from competitors (Kitch, 1977). Firms thus have an

incentive to claim as much territory as possible in their patent applications (Lanjouw & Schankerman,

1997). However, firms can also benefit from greater patenting speed, in the form of faster approval of

an application by a Patent Office, such as the U.S. Patent and Trade Office (USPTO), European Patent

Office, or Japan Patent Office. Most applications are eventually approved in some form (e.g., Carley,

Hegde, & Marco, 2015). Still, a lengthier adjudication process creates uncertainty about when,

whether, and which of the patent’s claims might be approved, and can lead to opportunity costs for

firms (Farre-Mensa, Hegde, & Ljungqvist, 2016; Gans, Hsu, & Stern, 2008; Harhoff & Wag-

ner, 2009).

Both greater patent application scope and faster patent approval speed thus have potential strate-

gic benefits for firms. Yet, there may be a trade-off between them if applications with more claims

978 CHOUDHURY AND HAAS