Firms’ patenting and collective cumulative knowledge: evidence from the largest R&D investors in the world

The article discusses R&D investments' efficiency and intellectual property rights (IPR)' suitability. There is a debate about whether IPR systems balance private knowledge returns' appropriation and access to cumulative knowledge to feed technological progress, thus contributing to social welfare. We analyse private R&D expenses' productivity in terms of inventiveness and investigate whether R&D investments generate knowledge that is of any use in further knowledge creation, examining the citations received by each patent family. Exploiting data about the largest R&D investors worldwide between 2007-2015, we find that R&D investments generate cited and uncited patents with approximately equal elasticities. We observe that an increasing number of patents do not contribute to collective knowledge creation because they are uncited. Eventually, uncited patents absorb more R&D resources than cited ones. Results are robust across industries and patent offices. We posit that uncited patents are socially undesirable and suggest implications for innovation policies.