A new measure of innovation: The patent success ratio

Summary

Patents have become increasingly important, especially over the past two decades. As patent office procedures have adapted to remain abreast of changing economic and scientific circumstances, it has also become increasingly important to define and analyse innovation more precisely. This paper introduces a simple new measure of innovation, the patent success ratio (PSR), or the ratio of successful patent applications to total patent applications. It has been argued in the extensive literature on innovation and technology policy that patents can serve as an accurate proxy for innovative activity or innovation. This paper suggests that PSR is a more accurate measure of how innovative activity has changed over time. A sensitivity analysis is conducted to assess the usefulness of the new PSR measure of innovation using annual US data for the period 1915-2001.