A new dimension of potential resources in innovation: A wider scope of patent claims can lead to new functionality development

Notwithstanding a significant expectation to increase the contribution of technology to productivity in megacompetition, the productivity of technology in Japan's high-technology industry has been declining, resulting in a decrease in competitiveness.The only solution to this twisted trap is to shift the current vicious cycle between R&D, technology stock and production to a virtuous cycle. Given strong constraints in fiscal investment, a practical solution to achieving a virtuous cycle is effective utilization of potential resources in innovation. A wider scope for patent claims can be an ingenious trigger leading to a virtuous cycle involving new functionality development, increased productivity of technology, production increases, greater R&D investment and a sustainable wider scope of patent claims.Japan's Patent Office introduced the Revised Examination Guideline (June 1993 Examination Guideline), including description requirements for patent applications. This induced leading high-technology firms to broaden their scope relative to claiming patents and succeeded in constructing the foregoing virtuous cycle, thereby demonstrating the significance of a new dimension of potential resources in innovation.On the basis of an empirical analysis focusing on techno-managerial efforts by Japan's pharmaceutical firms with both indigenous and the US capital, this paper attempts to demonstrate the foregoing hypothetical view.A noteworthy implication obtained from the research is that while leading pharmaceutical firms with indigenous capital have constructed a virtuous cycle by means of a wider scope of patent claims and have achieved new functionality development as a result, firms with the US capital have demonstrated a higher level of performance.