This study examines the causal effect of research and development (R&D) and patents on the financial performance of venture firms in Korea, a model catch‐up economy. The tests for random and fixed effects yielded important findings. R&D investment is the most significant factor affecting patenting. However, the results for the effect of R&D and patents on financial performance were inconclusive. Whereas R&D was positively correlated with sales growth, R&D and patents did not improve firm profitability. These findings illustrate the difference between advanced economies and catch‐up economies in terms of incentives for R&D and patents. Unlike in advanced economies, venture firms in catch‐up economies have to depend on incentive‐based government support. Venture firms in catch‐up economies respond to this incentive system by simply increasing the number of patents and by being less diligent in terms of achieving financial performance.

Energy Storage Systems (ESSs) have recently been highlighted because of their many benefits such as load-shifting, frequency regulation, price arbitrage, renewables, and so on. Among those benefits, we aim at evaluating their economic value in frequency regulation application. However, unlike previous literature focusing on profits obtained from participating in the ancillary service market, our approach concentrates on the cost reduction from the perspective of a utility firm that has an obligation to pay energy fees to a power exchange. More specifically, we focus on the payments between the power exchange market and the utility firm as a major source of economic benefits. The evaluation is done by cost- benefit analysis (CBA) with a dataset of the Korean market while considering operational constraint costs as well as scheduled energy payments, and a simulation algorithm for the evaluation is provided. Our results show the potential for huge profits to be made by cost reduction. We believe that this research can provide a guideline for a utility firm considering investing in ESSs for frequency regulation application as a source of cost reduction.

The purpose of this study is to examine how the collaboration structure among inventors in an R and D organization affects its capability to create impactful innovations. Specifically, this study is focused on examining whether a certain type of network mechanism found in collaboration among inventors contributes more to enhancing the future impacts of collaboration outputs, which is represented by the forward citations of their patents. To this end, co-invention networks for R and D organizations are constructed from an inventor-patent database, and the three structural patterns are measured by using network analytic constructs, namely, structural holes, strength of ties, and centralization. The results show that the presence of structural holes and strong ties are positively associated with the increasing forward citations, and that decentralized collaboration has also a positive impact. The findings offer support for both structural hole and network closure perspectives on social capital, which have been considered contradictive in the literature.

This paper examines the influence of patent citations, a proxy for the quality of firms’ innovation outputs, on financial analysts’ long-term growth forecasts for firms. We find that financial analysts are more likely to issue long-term forecasts for firms with higher patent citations. In addition, we find that financial analysts’ long-term forecasts are more positive for firms with high patent citations. These results imply that patent citations increase financial analysts’ coverage, and result in more positive forecasts for firms with impactful patents. Considering that financial analysts play important roles in allocating financial resources in capital markets, our findings suggest that patents are valuable assets for firms in securing capital from capital markets, and are thus essential for the sustainable growth of firms.

This study investigates the relationship between a firm’s intellectual property (measured by patents) and its future business performance and information environments by focusing on financial analysts’ forecasting behavior. The results show that patent citations have more influence on future profitability than patent counts and financial analysts pay more attention to firms with patent citations by showing higher followings for those firms. However, the findings also suggest that analyst forecasts do not fully reflect the implications of the effect of patent citations on future earnings and this under-valuation can mislead investors. Thus, we conclude that financial analysts ‘partially’ improve the information environment in terms of patent citations.