Peeking Inside the Black Box: Inventor Turnover and Patent Termination

Abstract

This study examines the consequences of inventor turnover for the termination of the patents they produced beforehand. The proponents of the knowledge-based view consider firms repositories of knowledge and inventors carriers of knowledge who create new inventions through recombination. I argue that because the knowledge about inventions resides with inventors, turnover among them may adversely affect the future use of their inventions due to the loss of tacit knowledge. As a result, firms are more likely to terminate the patents of inventors who have left than of inventors who remain. Further, the patterns of collaboration between departed inventors and others influence the aforementioned relationship. Analyses of the termination of patents, in the form of nonpayment of renewal fees, by pharmaceutical firms support the claims in the article. The findings have implications for how firms manage their knowledge portfolios in the face of inevitable inventor turnover and the resulting loss of tacit knowledge.