Does patenting help high-tech start-ups?

Using data on all high- and medium-tech start-ups in the UK in 2000, this paper assesses the effect associated with a firm’s decision to patent on a firm’s subsequent growth between 2001 and 2005. We propose a new approach to addressing well known issues challenging identification of any patent effect: firm heterogeneity, simultaneity between firm performance and patenting, and sample selection. Our findings suggest that patentees have higher asset growth than non-patentees of between 8% and 27% per annum.

► We assess whether patenting has an impact on the growth of high- and medium-tech start-up companies in the UK.
► We propose a new approach to addressing well known issues challenging identification of any patent effect: firm heterogeneity, simultaneity between firm performance and patenting, and sample selection.
► We find that a start-up firm’s decision to patent is associated with higher asset growth of between 8% and 27% per annum.
► We also find the decision to patent to be associated with substantially improved chances to survive the first five years of a start-up’s existence.