Firm Size and Inventive Activity

Abstract

Summary This paper is an attempt to study the relation between firm size and some variables related to firm size on one hand and the number of patent applications in the firm-as an indicator of inventive activity-on the other. Results from the study suggest that the theory advocating that large firms are responsible for a larger number of inventions on a than is exhibited by their cannot be generally supported. Favorable large-scale conditions in inventive activity can only be found in a few industrial sectors, among them the chemical industry. The results also suggest that firm size, measured in terms of the number of employees, is a far better explanatory variable to variations in the frequency of patent applications in the firm than variables such as market share, degree of diversification, working capital and cash flow.