Ex-ante Novelty and Creative Destruction in Inventions: A Network Approach to Patent Data Analysis

Researchers have long been studying technological innovation due to its significance in driving economic growth. Designed to protect the deemed values of inventions, patents and their information have been widely used in such studies to generate statistics for innovation evaluation. However, many of the commonly used patent indicators are or based on simple counts of inventions. Such conventional indicators fall short of providing in-depth understanding of the quality of innovation. In this paper we build on the literature of the origin of innovation and our previous work to propose two new indices based on a network method: IRII to capture the novelty in technological recombination, and NTR to represent the novelty brought by introducing new knowledge elements in innovation in a sector. Through empirical studies using patent filed in the Pharmaceuticals and Computer Technology sectors, we show that our proposed indices are not only correlated with the conventional patent quality indicators, but also related to the patents’ potential impact on future inventions. The analysis also explores into the sector-specific characteristics and country-specific differences.