Effects of patenting behavior on corporate growth: A panel data analysis of German start-up firms

Abstract

The present paper examines the relationship between innovations and employment growth in start-up firms. Patent applications are used as an indicator of innovative activity, using a merged data set of German enterprise and patent data. By applying fixed-effects and first-differencing panel data methods, it is shown that patenting activity has a positive effect on employment growth in the second year after application. Patenting firms do not generally exhibit higher growth rates than their non-patenting counterparts; instead, growth performance depends on their patenting activity over time. © 2007 Springer-Verlag Berlin Heidelberg.