文 / 沈芯菱
1. Introduction
National Applied Research Laboratories (NAR Labs) in 2015 released “Analysis of Taiwan's Competitiveness in Science and Technology”. The results indicate that in recent years, Taiwan's top three areas in patents with most investment and influential, including the technical impact indicators are electrical machinery, apparatus energy (6,480 cases), semiconductors (6,300 cases) and machine tools (709 cases).
Figure 1 : Relative Impact of Taiwan's Patents in Various Technology Fields Source : NAR Labs
The fields of electrical machinery and apparatus energy is the highest number of patents and the relative influence. The electrical machinery and apparatus energy include many industries, but according to the Chi research, the hot spot patent method, which was tools to predict the next generation of technology.
It was found that in the 2008 and 2009’s hot patents worldwide, the third highest field is UPC324754 "Electricity: Measurement and test / probe". The total number of patents and influence of the patent field: UPC324754 are both increasing while compare the period of 2005-2009 with 2000-2004 by the RTA index in Taiwan.
Measuring, testing and probing electricity is one of the important components of the smart grid. Therefore, the smart grid is an important trend in the world, and there are lots of patents in Taiwan.
The definition of "smart grid" by IEEE refers to the use of digital technology to upgrade the transmission and distribution network, in order to achieve the most optimal operation, and increase the energy market flexibility, then induce a number of the new markets which related to the smart grid.
Smart Grid deployment is imperative, not only in the United States but also around the globe. However, the smart grid is a revolutionary cause of the new communications and control capabilities, energy, generation model and adhere to cross jurisdiction regulatory structure.
There are six categories be classified in Taiwan Smart Grid Industry: AMI Infrastructure System, Distribution Feeder Automation System, Smart Home and Building System, Micro Grid System, Smart Transmission System and Energy Storage System.
In globalization and increasing hyper competition, companies requiring disruptive innovation and jumping to a new S-curve even more critical in nearly every industry. Matthyssens et al. (2006) stresses the importance of value innovation to create and sustain competitive advantage and to rejuvenate the organization.
In this paper, we will discuss the relationship among the R&D investments in the enterprise, patent innovation, and enterprise value in the rapidly changing environment of the smart energy industry, the relationship, whereby research to help companies understand the value of the patent lies. This paper has the following objectives:
The influence of enterprise R & D investment on Patent Innovation.
The influence of patent innovation on enterprise value.
The impact of R&D investment on enterprise value through patent innovation.
In the past studies, they were more concerning in the relation between patent and company performance, more emphasis in the patent numbers and accounting of enterprise performance of the semiconductor industry. This study is focus on the smart grid industry and has joined with the discussion of patent quality, and is different from the enterprise value.
2. Literature Review
2.1 Relationship between R & D investment and enterprise value：
Cohen and Levinthal (1990) defined absorption capacity as a firm's ability to recognize the value of new information, assimilate it, and apply it to commercial ends. The absorptive capacity is cumulative, while the companies invest more in R&D, it’s easier to accumulate it in the next one.
Griliches (1981) found a significant relationship is found between the market value of the firm and its intangible capital. Artz, K. W., et al. (2010) suggested that patenting and product innovation have different effects depending on the performance metric examined. Sohn, D. W(2010) showed R&D investment is the most significant factor affecting patenting.
Hagedoorm and Cloodt (2003) pointed that the performance of the organization patent can reflect the capability of R & D, and it can also affect the performance of the enterprise. R & D expenditures can be used to analysis enterprise value and non- comparison and subjective characteristics (David and Lev, 2002), as mentioned above, much of the literature reviews support investment in research and development to the enterprise operating performance have positive effects, and that the amount plays an important role.
Hypothesis 1 (H-1): R&D investment is positively associated with enterprise value.
2.2 The relationship between patent innovation and enterprise value：
The resource-based view (RBV) is the basis for a company to lie in the application of valuable tangible or intangible resources to improve the competitive advantage. ( Wernerfelt, 1984)
Peteraf (1993) analyzed that the essence of parsimonious model of resources and firm performance is superior resources, ex post limits to competition, imperfect resource mobility, and ex ante limits to competition.
R&D investment can improve productivity and create company value (Hirschey, 1982; Hirschey and Weygandt, 1985; Chauvin and Hirschey, 1993; Lev and Sougiannis, 1996; Hall, 1999).
Griliches and Mairesse (1984) analyzed that in high-technology industries, R&D investment have value relevance. Lev and Sougiannis (1996), and Hall (1999) show that R&D activities is positively associated with current equity value and future company value. Bloom, N., et al. (2002) showed that patents have an economically and statistically significant impact on firm-level productivity and market value.
Technological capabilities and Market-interface capabilities is the critical component of the core competence. Therefore, core competence is divided into technology core competence, marketing core competence (ET al.1995 Gallon). Patel and Pavitt (1977) argued that technology is one of the sources of the main advantage of the manufacturers, the patent citation can measure inimitable (Markman et al., 2004), and the quality of patent on behalf of, and with company profits have positive correlation (Hall et al., 2001).
Hypothesis 2 (H-2): Patents are positively associated with enterprise value.
2.3 The relationship between R & D investment and enterprise value through patent innovation：
Bound, J. et al.(1984) found that much larger output of patents per R&D dollar for the small firms, with a decreasing propensity to patent with size of R&D programs throughout the sample. Pakes(1985) showed that the total value of patent rights and the relationship between changes in it and changes in the quantity of patents. Scherer (1965) analyzed that the patent approval number and corporate performance in sales growth has a positive relationship
A successful business needs to respond to the changes in the environment, to take a different approach (Miller, 1988). Spital & Bickford (1992) study found that the rapid change of technology environment. Successful business investment in R & D funds ratio is usually higher than the average, and in a dynamic environment, the ability of technological innovation is the key to success.Hall et al. (2002) provided R&D intensity is related to patent measures, and the innovation of new product introduction is related to the operating performance. Schoenecker and Swanson(2002) found limited evidence that aspects of firm technological capability quality are related to firm performance.
Hypothesis 3 (H-3): The relationship between R&D and enterprise value is related to the influence of patent.
Method
3.1 Data Collection and Sampling
3.1.1 Data Sampling：The Standard Industrial Classification (SIC) is a system for classifying industries by a four-digit code, it is used by government agencies to classify industry areas. However, there is not yet a category exclusively for smart grid and companies that engage in smart grid spread across many categories.
In order to adopt more accurate sample, the sampling of this study will use listed companies of Taiwan Smart Grid Industry Association (TSGIA), which was officially established in 2010 for the purpose of facilitating the development of the smart grid industry in Taiwan.
In addition, TSGIA is also the officially recognized organization of standardization. TSGIA has 40 publicly traded companies as group member, which are from smart grid industry sectors in Taiwan, including system, component, material, and chemical suppliers, as well as government or private research institutions, consultancies and etc.
3.1.2 Data Collection：
3.1.2.1 Patents data source：The data comes from United States Patent and Trademark Office (USPTO) online patent database. Search Sample companies’ number of patents, patent citations from 2010 to 2015 year.
3.1.2.2 Enterprise value data source：The firms’ public financial reports from the Taiwan Economic Journal (TEJ) database, including R&D costs, technology introduction, the total assets, the number of employees, staff productivity.
3.2Variable index model：
3.2.1 R&D model： The R&D investment is usually measured by the current R&D expenses. Much of the literature is used to reduce the current operating income, and to eliminate the heteroscedasticity ,called R & D density, defined as follows (Sougiannis ,1994 ; Lev and Sougiannis,1996 ; Huang and Liu, 2005 )：
R&D intensity = R & D expenses / Net current revenue
3.2.2 Patent innovation index：
3.2.2.1 The index model of Patent quantity：Number of Patent (PN) is the granted numbers on the patent owner in a particular period of time, in the patent classification project. Arundel & Kabla (1998) and Cloodt & argued (2003) that the number of patents can be used as a measure of the number of R & D output in high-tech industry. CHI Research (ipIQ) first proposed the method of the quality and quantity of the patent, and the evaluation index is described as follows:
Number of patent approval = The United States Patent Office approved patent number from 2010 to 2015.
〖PN〗_(j,k)^i=∑_k▒〖PN〗_(j,k)^i
i: The patent owner.
j: The technical field.
k: A specific time.
〖PN〗_(j,k)^i: The approved patent number of the company in the technical field and specific time.
3.2.2.2 The index model of Patent Quality：Hall et al. (2001) argued that the patent quality can be found through the number of patent citations. Many studies have also found that patent citations have a positive impact on financial performance. (Ernst, 1995; Hagedoorn and Cloodt, 2003; Markman et al,2004)
Thus, the number of patent citations are as a measure of the quality of R&D output in this paper. Cites per patent (CPP) is the number of patents cited by other companies to assess the quality of the patent in the past five years. The higher the number of references, the more advanced technology, and more influence on the industrial technology and the future development.
CPPy ( Cites Per Patent ) = The number of times for a company which patents (during y-1 and y-6) was cited in year y / The number of patents (during y-1 and y-6) for a company in year y
3.3 The index model of Enterprise value：Many studies adopt the accounting evaluation model of corporate earnings, but may underestimate the value of the enterprise。Griliches(1981) suggested that the value of the enterprise is formed by the construction of tangible and intangible assets. Ohlson (1995) deduced the stock evaluation model based on the accounting information by dividend discount method(DDM), net surplus and linear Information Dynamics Model (LIM). Ohlson model has different results for different life cycle enterprises, so this study is a Ohlson model to consider the life cycle of the enterprise.
Pit=βi0+β1D1+β2D2+β3bvt+β4Xait+β5D1bvit+β6D2bvit+β7D1Xait+β8D2 Xait
i : Individual companies
P t : market price in phase t
X t : Abnormal earnings per share
Xat : Abnormal earnings per share phase t
Growth stage: D1=1 and D2=0
Maturity stage: D1=0 and D2=1
Decline stage: D1=0 and D2=0
The expected result
According to the literature review, the three assumptions should be established, then can strengthen the original literature, but also for the future researchers. There are a number of assumptions that may not be established. In the other situation, if not all the hypotheses are established, then it will need for further investigation in company strategy, research efficiency, government policies, competitors, trade barriers, time-lag effect between R&D investment, patent, and other factors.
Condition 1:
Hypothesis 1: R&D investment is positively associated with enterprise value. (True)
Hypothesis 2: Patents are positively associated with enterprise value. (True)
Hypothesis 3: The relationship between R&D and enterprise value is related to the influence of patent. (True)
Condition 2:
Hypothesis 1: R&D investment is positively associated with enterprise value. (False)
Hypothesis 2: Patents are positively associated with enterprise value. (True)
Hypothesis 3: The relationship between R&D and enterprise value is related to the influence of patent. (True)
Conclusion is not consistent with the literature review.Need for further investigation in company strategy, research efficiency, time-lag effect between R&D investment and patent, and etc.
Condition 3:
Hypothesis 1: R&D investment is positively associated with enterprise value. (True)
Hypothesis 2: Patents are positively associated with enterprise value. (False)
Hypothesis 3: The relationship between R&D and enterprise value is related to the influence of patent. (True)
Conclusion is not consistent with the literature review. Need for further investigation in government policies, competitors, trade barriers and etc.
Most patent and performance of previous studies in Taiwan, focusing on the semiconductor industry and enterprise performance, this study aimed at the emerging smart grid industry enterprise value. Furthermore, because governments are in effect of solar energy and smart grid industry. Therefore, there are many variables will affect the results, it is worth further observation and discussion.
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