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Gauging a Firm’s Innovative Performance Using an Integrated Structural Index for Patents

Abstract Purpose In this contribution we try to find new indicators to measure characteristics of a firm’s patents and their influence on a company’s profits. Design/methodology/approach We realize that patent evaluation and influence on a company’s profits is a complicated issue requiring different perspectives. For this reason we design two types of structural h-indices, derived from the International Patent Classification (IPC). In a case study we apply not only basic statistics but also a nested case-control methodology. Findings The resulting indicator values based on a large dataset (19,080 patents in total) from the pharmaceutical industry show that the new structural indices are significantly correlated with a firm’s profits. Research limitations The new structural index and the synthetic structural index have just been applied in one case study in the pharmaceutical industry. Practical implications Our study suggests useful implications for patentometric studies and leads to suggestions for different sized firms to include a healthy research and development (R&D) policy management. The structural h-index can be used to gauge the profits resulting from the innovative performance of a firm’s patent portfolio. Originality/value Traditionally, the breadth and depth of patents of a firm and their citations are considered separately. This approach, however, does not provide an integrated insight in the major characteristics of a firm’s patents. The Sh(Y) index, proposed in our investigation, can reflect a firm’s innovation activities, its technological breadth, and its influence in an integrated way.