Internal information quality and patent‐related innovation

This study investigates how the quality of information available within a firm affects patent‐related innovative activities. Relying on recent theoretical and empirical research, we use externally observable information attributes to proxy for the quality of internal information. Our empirical resul...

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Bibliographic Details
Published inJournal of business finance & accounting Vol. 47; no. 3-4; pp. 489 - 518
Main Authors Huang, Kelly, Lao, Brent, McPhee, Gregory
Format Journal Article
LanguageEnglish
Published Oxford Blackwell Publishing Ltd 01.03.2020
Subjects
Citations
Companies
coordination
Decentralization
Information systems
Innovations
internal information quality
M41
O32
patent‐related innovation
Quality
Strength
Task performance
Teams
Tenure
uncertainty
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Summary:This study investigates how the quality of information available within a firm affects patent‐related innovative activities. Relying on recent theoretical and empirical research, we use externally observable information attributes to proxy for the quality of internal information. Our empirical results indicate that firms with higher internal information quality generate more patents and patent citations. Cross‐sectional analyses show that this positive effect is greater when firms are susceptible to greater internal information frictions due to firm decentralization, short management team tenure, and long product development cycles. We also document that firms experience an increase in patents and patent citations following an improvement of internal information quality proxied by internal control weakness remediation. Overall, our results suggest that the positive relation between internal information quality and task performance extends to patent‐related innovation, a non‐routine type of task that may rely on information originating from sources other than firms’ formal internal information systems.
Bibliography:We thank Ellen Engel, Shawn Huang, Michael Kirschenheiter, Gilad Livne, Xiumin Martin, Michal Matejka, Catherine Shakespeare (Editor), Huaxiang Yin, an anonymous reviewer, and participants at University of Illinois at Chicago and Florida International University workshops, 2016 MAS Research and Case Conference, 2016 European Accounting Association Annual Congress, 2016 Conference on Convergence of Financial and Managerial Accounting Research, 2016 American Accounting Association Annual Conference, and 2019 Journal of Business Finance and Accounting Capital Market Conference for their helpful comments.
ISSN:0306-686X
1468-5957
DOI:10.1111/jbfa.12439