Seek and you shall find: the role of exploitive and explorative search in a biotechnology firm’s patent claims

Abstract

Patents are widely recognized to provide legal protections to a firm’s inventions. However, such protections are dependent upon claims that delineate the exclusive rights of the patent. This study examines theoretically and empirically the role of exploitive and explorative search on a firm’s patent claims in the biotechnology industry. We argue that firms are subject to ‘boundedly rational’ behaviors where firms are unable to cite their patent’s prior art and therefore are unable to identify with their patent’s novel claims. A firm’s exploitive and explorative search is offered as a solution to overcoming such bounded rationality. We argue and find that a biotechnology firm’s exploitive and explorative search has an inverted u-shaped relationship to a firm’s patent claims. A key contribution of this study is that a firm’s citation behavior is not only attributed to strategic and legal motivations, but also be to behavioral explanations.