LAUSR

Inventing is a recombinant process that involves searching and recombining differ- ent streams of knowledge. The value of invention is associated with not only how many prior inventions are considered, but also how they are related to each other. We introduce social network analysis broadly used in the social capital theory, and extend the dimension of analysis for the evaluation of patent value. This study em- ploys U.S. pharmaceutical patent data and investigates whether the network charac- teristic of backward citations have significant effect on the future patent value. The empirical results suggest that the network features of backward citations measured by cohesion, constraint, and efficiency have statistically significant implication on the value of invention in both level and depreciation rate. The study also provides empirical evidence that the exploration strategy is more significantly and positively correlated with the future value of invention compared to the exploitation strategy of inventors.