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A patent-analysis of the evolution of the
electric toothbrush industry
30th of June 2014
Bachelor thesis – Business studies University of Amsterdam Faculty Economics and Business
1 Table of contents 1. Introduction………2 2. Theoretical framework……….4 3. Conceptual Framework……….13 4. Methodology………15
5. Validity, generalisability and Reliability ………20
6. Results………..21
7. Discussion………31
8. Limitations and opportunities for further research ……….35
9. Conclusion and implications………..36
10. References…...37
11. Appendix………..39
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1. Introduction
The emergence, development and decline of industries, is what characterizes the growth of modern economies. Industries emerge, develop and decline and this phenomena is known as evolution. Firms are ever changing entities, firms enter an industry, some exit, some firms grow and other decline. Industrial evolution is characterized by an intense change of an industry at any given point of time (Malerba and Orsenigo, 1996). An important factor that influences the evolution of an industry is turbulence, which comes due to entry, exit and changes in market share. In general birth rates of firms in industries that take off are high, and a large percentage of the entrants exit the industry within a few years after entry (Malerba and Orsenigo, 1996). In general turbulence appears to be a fundamental feature of industrial evolution. Although industrial evolution is also characterized by persistence in the innovative activities by a large number of existing firms in the industry (Malerba and Orsenigo, 1997). Another phenomenon seen in general is cumulativeness. Cumulativeness means that firms which have innovated at a certain point in time, have a higher probability of being innovative in the future (Malerba and Orsenigo, 1996). These above mentioned phenomena
constitute rather general characteristics of industrial dynamics, however one can find significant differences across sectors. Empirical evidence had shown that the rate, type, direction and effect on industry development of technological change proceeds differently across industries (Malerba and Orsenigo, 1996).
Previous research has developed the industry life cycle. The industry life cycle indentifies three stage in the evolution of an industry. First a radical innovation sets motion in a stream of product
innovations, this stage is the beginning of an industry. In the second stage of the evolution of an industry emerges a dominant design. And in the final and third stage the industry matures, and is characterized by incremental innovations (Malerba and Orsenigo, 1996). In general the beginning of an industry is followed by frequent entries of new firms and product innovations. This is followed by a phase with decreasing amount of new entrants and a decreasing amount of product innovations. And then the dominant design emerges, which results in a decrease of product diversity and product innovations (Malerba and Orsenigo, 1996). The industry life cycle and the concept of a dominant design provide a starting point for an analysis of the structural evolutions of industries.
Innovative activities and technologies may be quite different among industries. In some industries innovative activities and certain technologies are concentrated among few major innovators, while in others innovative activities and technologies are distributed among larger numbers of firms (Malerba and Orsenigo, 1997). In their paper Malerba and Orsenigo (1997) propose that different
3 In this paper the industry of electric toothbrushes will be studied. From a consumer point of view the toothbrush industry hasn’t really changed since the last radical innovation, being the invention of the electric toothbrush in the 1950’s. One of the newest innovative inventions of electric toothbrushes is the Bluetooth-enabled Beam Brush. This toothbrush is able to send information to you cell phone or tablet (Strickland, 2013). The purpose of this paper will be to analyze the history and evolution of the electric toothbrush industry. In this paper the different stages of evolution of the electric toothbrush industry will be discussed. The most important firms of the industry will be discussed as well as the most important innovations. The research question that will be examined is, how did the electric toothbrush industry evolve?
To answer this question first in the theoretical framework a literature study will be done. This study will show different theories of industry evolution, and reveal what patents can tell us about
innovation within industry. Then the conceptual framework will discuss what will be studied based on the theoretical framework. The next chapter is the methodology, the methodology will show how the research will be conducted. The methodology will be followed by a chapter about the validity, generalisability and reliability. Then the results will be discussed, followed by a chapter with discussion of the results. Then there will be a chapter with limitations and opportunities for future research. The final chapter is the conclusion.
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2. Theoretical framework
In this paragraph relevant literature about industry evolution, innovation and patents will be
discussed. First the industry life cycle/technology life cycle will be discussed. Then two different types of innovation patterns will be discussed, the Schumpeter Mark I and II. Some general information about patents is given. Patent count, patent citations and the linkage between technology and basic science is also discussed.
Industry life cycle/Technology life cycle
An emerging industry can be defined as “newly formed or re-formed industry that has been created by technological innovations, shifts in relative cost relationships, emergence of new consumer needs, or other economic and sociological changes that elevate a new product or service to the level of a potentially viable business opportunity” (Phaal et al., 2011, p. 217). The exact emergence of an industry can be difficult to define, as well as in what stage of the industry life cycle an industry is currently. To simplify the understanding of industry dynamics involved within industrial emergence, several models in the literature have been introduced breaking down industrial evolution into phases or stages within an industry life cycle (Phaal et al., 2011, p. 218). In the current literature there is an overlap in the terminology used, such as ‘industry life cycle’, ‘product life cycle’, and ‘market and industry evolution’. Industrial emergence can be looked at as an evolutionary process. Those innovations and firms that are able to adapt to their evolving environment are retained, those who fail to adapt are eliminated. The industry life cycle depicts the dynamics of how industries evolve and develop, including emergence, growth, maturity and decline. Studying the industry life cycle enables us to depict the key actors and innovations of an industry, and show which businesses succeed or fail over time (Phaal et al., 2011).
According to Gao et al. (2013) the technology life cycle is a concept to measure technological changes, it consist of four stages. The first stage is the emerging stage, the emerging stage is characterized by a new technology with low competitive impact and low integration in products or processes (Gao et al., 2013, p. 399). The second stage is the growth stage, in the growth stage there are pacing technologies with high competitive impact that have not yet been integrated in new products or processes, and maintain their high competitive impact (Gao et al., 2013, p. 399). Pacing technologies are technologies with a high (future) competitive impact, which have not been
integrated in new products yet (Ernst, 1997, p. 364). The third stage is named maturity, some pacing technologies turn into key technologies, are integrated into products or processes, and maintain their high competitive impact. As soon as a technology loses its competitive impact, it becomes base
5 technology (Gao et al., 2013, p. 399). The fourth and the last stage is named the Saturation stage by Gao et al. (2013). In the saturation stage the base technology might be replaced by a new technology (Gao et al., 2013, p. 399). Gao et al. (2013) do not identify a decline stage.
Fig. 1. The S-curve concept of technogy life cycle (Gao et al., 2013).
Other authors confirm that a technological life cycle is a concept to measure technological changes, but these authors identify another stage, namely the decline stage. Klepper concluded that there is a prototypical life cycle of industries (Audretsch & Feldman, 1996, p. 253). The answers to the question who innovates and how much innovative activity is undertaken are very much linked to the stage of the life cycle in which an industry is operating (Audretsch & Feldman, 1996, p. 253). According to Klepper (1996) a lot of firms enter a new industry in the emerging stage. During this emerging stage firms offer many different versions of the industry’s product, there are a lot of product innovations, and market shares change rapidly (Klepper, 1996, p. 562). In the emergence stage there is
uncertainty about the user preferences, as a result many firms will enter the market. The competition will focus on product innovation and the firms will develop different variants of the product (Klepper, 1995). The market will start growing, and as users experiment with the different versions of the product, meanwhile firms learn more about how to improve the product. These product improvement will eventually lead to a dominant design (Klepper, 1995). Despite the fact that the market is growing the entry of new firms slows, and the firms that are unable to produce the dominant design in an efficient manner exit the industry. This leads to a shakeout in the number of firms and a decrease in product innovations (Klepper, 1995).
6 According to Haupt et al. (2007) a widespread approach to study technology life cycles, is by
observing the evolution of patent applications. Typically the evolution of the number of patent applications will follow a S-shape or a double S-shape curve (Haupt et al., 2007, p. 388). Haupt et al. differentiate four stages of the product life cycle, introduction, growth, maturity and decline. The technology life cycle starts off with the introduction stage, this is the beginning of the development of a new technology. During this phase fundamental scientific and technological problems have to be resolved. The introduction stage calls for radical innovations, therefore the number of patent applications is low and only slowly increasing (Haupt et al., 2007, p. 388). During the introduction the application ratio (patent applications per applicant) is typically high, because usually only a small number of pioneer firms are willing to bear the research & development risk. Developing marketable product can last a long time, therefore the number of patent applications can stagnate or even decline near the end of the technology’s introduction stage (Haupt et al., 2007, p. 388). Other reasons for such a temporary stagnation or decline of patent applications can be: innovative products are still too expensive, the consumer acceptance is still low, the range of technology application possibilities is not clear yet, or the dominant design has not evolved yet (Haupt et al., 2007, p. 388). A broad range of market applications of the technology can be developed, when the basic technological and market uncertainties have vanished. Innovations become less radical, therefore the research and development risk for firms decreases and the number of patent
applications increases. This is the moment that the growth stage of the technology life cycle begins (Haupt et al., 2007, p. 388). New competitors enter the industry and even though the number of patents is increasing, the entry of new firms will lead to a decrease of the concentration ratio of the patent application (Haupt et al., 2007, p. 388). A decrease of the concentration ratio of patent applications means that the average percentage of total patent applications owned by a single firm decreases. The growth stage of the technology life cycle is followed by the maturity stage. During the stage of maturity the number of patent applications remains constant and innovations are typically incremental (Haupt et al., 2007, p. 388). The final stage following the maturity stage is the decline stage. The decline stage begins when the potential for new product innovations on the basis of the technology and therefore the number of patent application decreases. By studying the S-shape or in the case of a temporary stagnation or decline the double-S-shape, you can find out in which stage the industry is currently active. The patent activity index is a valuable indicator of the current technology life cycle stage in a concrete case (Haupt et al., 2007, p. 388).
Phaal et al., (2011) split the emergence phase up into three separate phases. The first of these phases is named the precursor phase. In the precursor phase supporting scientific phenomena are established, extending through to the first demonstrator(s) of application potential, which stimulate
7 industrial interest and investment in particular market-directed technology feasibility studies (Phaal et al., 2011, p. 221). The second phase of the emergence of an industry is named embryonic phase, during the embryonic phase the reliability and performance of the market-directed technology is improved to a point where it can be demonstrated in a market-specific environment (Phaal et al., 2011, p. 221). The technology will be developed to a point where commercial potential can be demonstrated through revenue generation, at this point the industry will transform into the nurture phase. During the nurture phase the price and performance of the application is improved to a point where sustainable business potential can be demonstrated (Phaal et al., 2011, p. 221). During the transformation from the nurture phase to the growth phase the price-performance demonstrators are translated into a market with mass growth potential. In the growth phase marketing, commercial and business development lead to sustainable industrial growth (Phaal et al., 2011, p. 221). The growth phase is followed by the maturity phase, during this phase established applications,
production processes and business models are refined (Phaal et al., 2011, p. 221). The final phase is the decline phase, the industry either declines or is sustained or renewed through the development of new science-based technologies that repeat the above phases (Phaal et al., 2011, p. 221).
Schumpeter Mark I and II
Innovative activities among industries may differ a lot. Innovative activities can be concentrated among few major innovators in an industry, while in other industries innovative activities are distributed among several firms. Large firms can be major innovators, while in other industries small firms might be quite active. Finally, in some industries only established firms innovate, while in other industries new innovators continuously appear (Malerba & Orsenigo, 1995; Marlerba & Orsenigo, 1997). According to Malerba and Orsenigo (1995; 1997) these differences may be related to a fundamental distinction between Schumpeter Mark I and Schumpeter Mark II.
Two major patterns of innovative activities are identified by Schumpeter. The first one is labelled Schumpeter I, and is characterized by ‘creative destruction’ with technological ease of entry and a major role played by entrepreneurs and new firms in innovative activities (Malerba & Orsenigo, 1995, p. 452; Malerba & Orsenigo, 1997, p. 85). In Schumpeter Mark I industries new firms enter an industry with new innovations. These new firms challenge established firms with their new
innovations, and by doing this disrupt the current ways of production, organization and distribution (Malerba & Orsenigo, 1997, p.85). This pattern of innovation could also be labelled ‘widening’. The widening pattern is related to a continuously growing innovative base, the innovative base is continuously growing through the entry of new firms and the erosion of the competitive and technological advantages of the established firms (Malerba & Orsenigo, 1995, p. 452; Malerba & Orsenigo, 1997, p.86). The second innovative pattern is labelled Schumpeter Mark II, and is
8 characterized by ‘creative accumulation’ with the prevalence of large established firms and the presence of significant barriers to entry for new innovators (Malerba & Orsenigo, 1995, p. 452; Malerba & Orsenigo, 1997, p. 86). Relevant barriers of entry to new firms are created, with the accumulated stock of knowledge, competencies in research and development, production and distribution and the financial resources of existing firms (Malerba & Orsenigo, 1997, p. 86). This pattern of innovation could also be labelled ‘deepening’. A few firms which are continuously innovative through the accumulation over time of technological and innovative capabilities are dominant in this pattern of innovation (Malerba & Orsenigo, 1995, p. 452; Malerba & Orsenigo, 1997, p.86). Changes may occur in Schumpeterian patterns of innovation during the evolution an industry. During the industry life cycle a Schumpeter Mark I pattern of innovative activities may turn into a Schumpeter mark II pattern (Malerba & Orsenigo, 1997, p.86). In the early stages of the industry life cycle when technology is changing very rapidly, uncertainty is very high and barriers to entry are very low, new firms are major innovators and the key player of the industry, the industry starts of as a Schumpeter Mark I pattern. Later on in the industry life cycle when the industry matures, large firms with monopolistic power come to the forefront of the innovation process, and technological change follows well-defined trajectories, economies of scale, learning curves, barriers to entry and financial resources become important in the competitive process it changes to a Schumpeter Mark II pattern (Malerba & Orsenigo, 1997, p. 86). A Schumpeter Mark II pattern could also change into a
Schumpeter Mark II pattern through major technological and market discontinuities. New firms which are using new technology or are focusing on new demand displace the existing large firms, the stable industry is replaced by a more turbulent one (Malerba & Orsenigo, 1997, p. 86). By examining patent data it is possible to observe which patterns of innovation an industry resembles. The
following characteristics have to be analyzed according to Malerba and Orsenigo (1997, p. 87): • Concentration and asymmetries among firms of innovative activities
• Size of the innovating firms
• Change over time in the hierarchy of innovators
• Relevance of new innovators as compared to established ones.
The concentration of innovative activities is measured by the concentration ratio of the top four innovators (Malerba & Orsenigo, 1995, p. 455). The size if the innovating firms is calculated as the share of total patent applications applied for by firms with more than 500 employees (Malerba & Orsenigo, 1995, p. 455). Entry of new innovators is measured by the share of patent applications by firms applying for the first time in a given technological class (Malerba & Orsenigo, 1995, p. 457). The Schumpeter Mark I (widening) model is characterized by low concentration and asymmetries in
9 innovative activities, low stability in the ranking of innovators, and high entry of new firms and small sized firms new innovators (Malerba, 1997, p. 89-90). The Schumpeter Mark II (deepening) pattern is characterized by high concentration and asymmetries in innovative activities, high stability of the hierarchy of innovators, and low entry of new firms and large sized firms innovators (Malerba & Orsenigo, 1997, p. 90).
General information patents
In the era of knowledge economy competitive advantages are more based on intangible assets such as the knowledge embodied in a patent document, and less on the allocation of physical assets (Chen & Chang, 2010, p. 20). To increase corporate value firms should proactively focus on patents (Cheng & Chang, 2010, p. 20). Patent systems are intended to promote innovation, and innovation plays a key role in economic development (Csárdi et al., 2007, p. 783). Firms often apply for patents for their innovations in order to protect their products and processes against prospective competitors
(Archibugi & Pianta, 1996, p. 452). Submission of a patent application is the first announcement of inventors and innovators about a new technique or technology (Sen & Sharma, 2006, p. 1643). According to Hirschey and Richardson (2001) a patent has to meet certain objective criteria concerning novelty and utility before being granted. For an invention to be patentable it must be novel and not anticipated in the already practiced state of the art (Harhoff et al., 1999, p. 511; Hall et al., 2005, p. 18).Publication of the patent claim gives the primary information available about a new technology (Sen & Sharma, 2007, p. 1643). According to Marco (2007) a patent system fulfils two roles. It provides legal protection for novel products and processes and it ensures that the technology is available to all under certain conditions (Sen & Sharma, 2007, p. 1643). A patent ensures the owner of the technology not to lose control of this technology (Chen & Chang, 2010, p. 21), the patent system is for firms a method to protect their inventions (Archibugi & Pianta, 1996, p. 454). Patents are only for a limited time legally effective, currently the term is twenty years from the date of application. But they remain effective as ‘prior art’ indefinitely (Csárdi et al., 2007, p. 784). For the majority of their patentable inventions firms make use of patenting, not all inventions are patentable though (Archibugi & Pianta, 1996, p. 454). And not all patented inventions actually become innovations, according to Archibugi et all. (1996) it has often been argued that the value of individual patents is highly skewed. Effective patent protection is an important source of competitive advantage (Cheng & Chang, 2010, p. 21), because a granted patent protects the inventor from imitations, for at least a period of time and patent protection supports the internal use of
technology. A patent grants the patent holder an exclusive right for a limited period, according to Bessen (2009) this should provide an economic incentive for invention. The right to exclude allows a patent holder to become a monopolist, or more often to achieve some lesser degree of market
10 power. This market power can provide a firm the ability to earn supra-normal profits, that are the economic incentive to invent (Bessen, 2009, p. 1604).The right to exclude and the market power will allow a firm to charge prices that exceeds those they could charge in a perfectly competitive market (Bessen, 2009).
Patent count
Patents are unrivalled as rapid source of information about innovation and the development of technologies. The number of patents per year has been widely used as a technology indicator (Sen & Sharma, 2007, p. 1643).Although patent statistics are often distorted for various reasons, such data can be very valuable for indicating past, present and future research and development trends. According to Hirschey and Richardson (2001) the number of patents granted to a specific firm over a given period of time is one of the most useful measures of the pace of inventive activity. Though simple patent counts are not very good measures for the importance of inventive output, by itself the number of patents may be much better measure of the quantity of inventive output than it is a quality-based measure (Hirschey & Richardson, 2001, p. 68).
Patent citations
When a patent application for an invetion is issued its text normally includes citations to prior patents, relevant prior scientific and technological literature (Harhoff et al., 1999, p. 511). Inventors are required to provide citations to known references that are material to patentability, they are not obligated to search for relevant references, although patentees or their attorneys often do so (Csárdi et al., 2007, p. 784). Patent examiners search for additional relevant references during the
consideration of the application. Potential prior art that was considered by the examiner is included in the patent citations (Csárdi et al., 2007, p. 784). Thus patent citations reflect the prior art that are most closely related to the invention claimed in an application, according to the patentees, their attorneys and the USPTO patent examiners (Csárdi et al., 2007, p. 784). Backwards citations are citations made by a patent to previously issued patents (Marco, 2007, p. 291). By studying backward citations one studies the spillovers called knowledge flows (Wartburg et al., 2005, p. 1593). Typically a U.S. patent that is issued has five or six prior U.S. patents cited on its front page (Hirschey & Richardson, 2001, p. 70). Forward citations are citations received by a patent from subsequently issued patents (Marco, 2001, p. 291). The number of forward citations changes over time, even beyond the patent expiration. Particularly novel patented innovations will have a lot of forward citations, for this reason the number of citations received by a patent had been used in the literature as a measure of the innovative output embodied in the technology (Marco, 2007, p. 291).
11 The basic idea behind patent citations as an indicator of importance is very simple, if a U.S. patent is cited by a lot of subsequently issued patents it is likely to contain a significant advance that has preceded these subsequent inventions (Albert et al., 1991, p. 251). The number of citations generated is commonly referred to as the impact index (Hirschey & Richardson, 2001, p. 68). The cited patent has been prior art to subsequent patent, and the number of citations tell something about the technical impact or quality of the invention embodied in that patent (Albert et al., 1991). Many authors have written about the forward citations as a way to measure the impact of a patented invention. If a patent is heavily cited in later patents, it is an indication that the earlier patent represented an important scientific advance (Hirschey & Richardson, 2001, p. 70). Empirical studies have also revealed that a positive relationship between the number of forward citations a patent has and firm performance or stock market valuation exists (Wartburg et al., 2005, p. 1593). According to Archibugi & Pianta (1996) the count of forward patent citations is an indicator of the technological impact of the patented invention. The results of the paper of Carpenter et al. (1981) show that highly cited patents are associated with patents of innovative and important products. The basic idea behind patent citations can be compared to that of citations of scientific papers. The analysis of patent citations and citations in scientific literature are somewhat different, but the interpretation of high citations as indicator of a document of importance is the same (Albert et al., 1991). In scientific literature citations acknowledge the work and importance of the cited paper, therefore papers that are highly cited are usually important papers. If a patent is cited many times, this indicates that many later inventions have claims based on the invention granted in the cited patent. Like with scientific papers important patents are usually cited many times (Albert et al., 1991). Though there are some important differences, for instance the tendency to cite original references that mark the beginning of thinking is higher in scientific publications than in patent documents. In scientific literature, new articles usually refer to classics in the field of their study (Wartburg et al., 2005, p. 1593).
From the research of Albert et al. (1992) it can be concluded that highly cited patents are of significantly greater technological importance than patents that are not cited at all, or only infrequently cited. According to Albert et al. (1992) there seems to be virtually no difference in importance between patents that are never cited or cited only a few times.
Finally highly cited patents occur relatively infrequently (Albert et al., 1992, p. 258). There is a problem when comparing the impact of patents based on forward citations, because younger patents are bound to have fewer citations that otherwise identical older patents (Marco 2007, p. 291).
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Linkage between technology and basic science
Several contributions to technological progress and industrial breakthroughs are made by basic science, they are largely indirect through the provision of trained academic problem-solvers and engineers (Tijssen, 2001, p. 36). A lot of these researches are freely disclosed and therefore difficult to trace as they are being used and applied within corporate research and development activities and technical inventions. As a result, it is difficult to describe in quantitative measures the flow and feedback between research outputs and corporate research and development activities (Tijssen, 2001, p. 36). According to a survey from Mansfield (1991) amongst US firms, ten percent of industrial innovation would not have occurred or would have occurred with great delay without the
contributions of academic research (Tijssen, 2001, p. 36).
Patents are one of the few useful sources with a bearing on the technical properties of the invention and its relationship with features of the underpinning science (Tijssen, 2001, p. 37). This measure of inventive output is called science linkage (Hirschey & Richardson, 2001, p. 70). Science linkage is based upon how closely a company’s patents are to the scientific research base in the area. Science linkage is measured by the average number of other references cited on the front page of a patent (Hirschey & Richardson, 2001, p. 70). Many patents contain explicit references to scientific inputs in the form of non-patent citations (Tijssen, 2001, p. 70). Thus patents do not only contain citations to previous patents, but also references to the scientific literature, for instance research papers and other scientific publications, to books, reports and other nonscientific literature. When studying the linkage between technology and science the references to books, reports and other nonscientific literature is excluded (Hirschey & Richardson, 2001, p. 70). The citations to the scientific literature from patents provide an indication of linkage between technology and basic science (Sen & Sharma, 2006, p. 1647). Of patents with two or more non-patent citations, research activities are considered either ‘very important’ or ‘important’ for the development of the patented invention (Tijssen, 2001, p. 39). Especially in the fields of electronics and biotechnology the citations count of scientific literature is high (Sen & Sharma, 2006, p.1647).
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3. Conceptual framework
In this paragraph I will discuss what the purpose is of the research and what will be done in the rest of this research. The aim of this research is to explain how the electric toothbrush industry evolved. This will be done by looking at the different stages of the industry life cycle, which innovative pattern the electric toothbrush industry followed. A closer look will be taken at what the most important patents are and who owns them. The research question that will be examined is, how did the electric toothbrush industry evolve?
The different stages of the industry life cycle as discussed in the theoretical framework will be identified. Based on the collected data a curve of the industry life cycle of the electric toothbrush industry will be drawn. Typically the evolution of the number of patent applications will follow an S-shape or a double S-S-shape curve (Haupt et al., 2007, p. 388). The research will show if the electric toothbrush also follows this typical S-shape or a double S-shape. This curve will help to identify the four different stages of the industry life cycle, and help depict the dynamics of how the electric toothbrush industry evolved and developed. Studying the industry life cycle enables to depict the key actors and innovations of an industry, and show which businesses succeed or fail over time (Phaal et al., 2011).
This research will reveal what stages of the industry life cycle the electric toothbrush industry has gone through. First this research will identify the emergence stage of the electric toothbrush industry, based on the industry life cycle. When did it emerge? In which year did the emergence stage start and in how long did it last? These are questions that will be answered. If possible the three separate phases (precursor phase, embryonic phase and the nurture phase) of Phaal (2011) of the emergence stage will be depicted. Secondly the research will identify the growth stage. It will identify the take-off point of the electric toothbrush when the emergence stage transformed into the growth stage. Then the research will identify when the electric toothbrush industry matured. The S-curve will also show if the industry if it has reached the maturity stage if it has reached the decline stage. If it has reached the decline stage the research will also show if the industry life cycle of the electric toothbrush industry follows a double S-shape.
Another question that will be answered is which innovative pattern the electric toothbrush industry followed. Did it follow the Schumpeter Mark I or the Schumpeter Mark II model, or both? To answer this question I will look at how many new firms have entered the electric toothbrush industry with a new innovation, which will tell something about the widening pattern. And I will look if a few firms are continuously innovative, which will tell something about the deepening pattern. Changes in the
14 innovation pattern may occur during the industry life cycle, for this reason I will look if during the different stages of the industry life cycle the innovative pattern changes or stays the same. How many firms entered the industry each year, and how many firms were active each year will also be discussed.
The most important firms of the electric toothbrush industry will be identified, this will be done based on concentration ratio of ownership of patents. What percentage of the total amount of patents does each firm owns?
Based on patent citations the most important patents will be identified, ownership of these patents is also an indicator of important firms.
A closer look will be taken at individual patents. On what previous knowledge are the patents based, is there a lot of knowledge spillover? This research will try and identify the most important and valuable patents. Which patents have patented the most novel and valuable innovations? And who owns these most important patents? What is the linkage between the technology used in the electric toothbrush industry and basic science?
In the next paragraph the methodology will be discussed. What is the research design, how will the data for this research be gathered, and what kind of analysis will be done.
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4. Methodology
In this paragraph the methodology will be discussed.
Research design
This research is of an explanatory nature, the aim is to explain how the electric toothbrush industry evolved and innovated. The research conducted to do this, is a qualitative research based on quantitative data. The theories that have been discussed in the paragraph of the theoretical framework will be applied to the electric toothbrush industry.
The use of patents and patent statistics as indicators of technological progress stands for both, a long tradition and a controversial discussion about the value of patents as indicators of technological process (Wartburg et al., 2005, p. 1591). Patents are a direct output of industrial research and development and other inventive activity, and mirror the cumulative process of technological change. On the one hand patent data enable longitudinal research and on the other hand they contain citation information that link different patents at different stages of technological
development (Wartburg et al., 2005, p. 1591). Patents are unrivalled as rapid source of information about innovation and the development of technologies. The number of patents per year has been widely used as a technology indicator (Sen & Sharma, 2007, p. 1643). The relative advantage of patens vis-á-vis other indexes, is the availability, scope of coverage and richness of information of a patent database (Yoon & Park, 2004, p. 38). Patents are often considered as the best source for the timely recognition of technological changes (Cheng & Chang, 2010, p. 21). Using patents as a
technological indicator has like any other indicator advantages and disadvantages (Archibugi & Pianti, 1996, p. 452).
Advantages:
• Patents are a direct outcome of the inventive process, more specifically of inventions which are expected to have a commercial impact. They are an appropriate indicator for capturing the proprietary and competitive dimension of technological change (Archibugi & Pianti, 1996, p. 452).
• It is likely that applications that are filed are for those inventions which are valuable and on average are expected to provide benefits that outweigh the costs of obtaining patent protection (Archibugi & Pianti, 1996, p. 453).
16 • Patent can be studied for each technological field, because they are broken down by
technological field (Archibugi & Pianti, 1996, p. 453; Cheng & Chang, 2010, p. 21; Tijssen, 2001, p. 38; Wartburg et al., 2005, p. 1591; Hall et al., 2005, p. 17).
• Patent statistics are available in large numbers and for very long time series (Archibugi & Pianti, 1996, p. 453; Hall et al., 2005, p. 18).
• Patents are public documents (Archibugi & Pianti, 1996, p. 453).
• Patent data are available even for companies that are not required to report research and development data (Cheng & Chang, 2010, p. 21).
• Patents contain a large amount of technological information, and they are classified according to standardized schemes (Cheng & Chang, 2010, p. 21).
• One of the most useful measures of the pace of inventive activity is the number of patents granted to a specific firm over a given period of time (Hirschey & Richardson, 2001, p. 67). • The major patent systems, as USPTO cover all countries (Tijssen, 2001, p. 38).
Disadvantages
• Not all inventions are technically patentable (Archibugi & Pianti, 1996, p. 453; Hall et al., 2005, p. 18).
• Not all inventions are patented. Firms sometimes choose to protect their inventions with alternative methods (Archibugi & Pianti, 1996, p. 453; Wartburg et al., 2005, p. 1592; Hall et al., 2005, p. 18).
• Firms have different propensity to patent in their domestic market and in foreign countries, which largely depends on their expectations for exploiting their inventions commercially. In each national patent office, there are many more applications from domestic inventor than from foreigners (Archibugi & Pianti, 1996, p. 454).
• Each national patent office has its own institutional characteristics which affect the costs, length and effectiveness of the protection accorded. In turn, this affects the interest of inventors in applying for patent protection (Archibugi & Pianti, 1996, p. 453).
• Invention is not equal to innovation; inventions may not become economically relevant while innovation refers to inventions that were introduced in the marketplace (Wartburg et al., 2005, p. 1592).
Data collection
In this research the patents of the electric toothbrush industry will be studied. The patent data that will be used for this research will be collected from the US Patent Trademark Office (USPTO), this the
17 United Stated patent system. In the USPTO an application for a US Patent is filed, a patent examiner at the USPTO determines whether a patent is granted or not (Csárdi et al., 2007, p. 784). The patent examiner will look at the requirements of novelty and non-obviousness with respect to existing technology. A patent that is issued by the USPTO is assigned a unique patent identification number (Csárdi et al., 2007, p. 784). In the USPTO the electric toothbrush patents can be found in subclass 101 from class D04 this subclass consists of 274 patents, due to the available time for this research it is not feasible to study that many patents. For this reason the results have to be narrowed and that is why for this research I have searched within the subclass of the electric toothbrush industry on the words ‘toothbrush’ and ‘electric’. This resulted in 124 patents to be studied, which is feasible in the given time period. The patents that are being studied were issued between 1976 and 2013. Patents before 1976 were not in the database of the USPTO, and the patents that are issued in 2014 are left outside the scope of this research because the year 2014 has not finished yet. As a result of this time scope the research is being done based on 121 patents. For each patent I collect the file date, issue date, assignee firm, inventor(s), backward patent citations, forward patent citations, other
references, internal knowledge citation firm, self-citation inventor(s), forward internal citation firm, and forward self-citation inventor(s).
Data analysis
Industry life cycle
The industry life cycle or technology life cycle will be drawn based on a patent count of number of patents issued per year. According to Haupt et al. (2007) a widespread approach to study technology life cycles, is by observing the evolution of patent applications. In order to identify the different phases within the industry life cycle based on number of patents applications of granted patents, it is useful to eliminate short-term fluctuations (Haupt, 2007, p. 391). Thus in this research a line will be computed of moving three-period-average-values of granted patent applications. According to Haupt et al. (2007) there are several good reasons for this approach. Since patents contain technological know-how they inform us about the technological development. Data about patent inform us about the commercial potential of a technology. Patent applications inform about the technology life cycle also before life cycles of different products, which are based on the technology can start. And patent applications can be measured easily and objective by using databanks, in this case the USPTO (Haupt et al., 2007, p. 387). These advantages make it reasonable to prefer patent application data as a basis of technology life cycle description according to Haupt et al. (2007).
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Important patents
To examine which patents are the most valuable, the forward citations of each patent have to be studied. Patent citations contain not just important technological information but also significant economically relevant information (Hall et al., 2005, p. 19). Particularly novel patented innovations will have a lot of forward citations, for this reason the number of citations received by a patent has been used in the literature as a measure of the innovative output embodied in the technology (Marco, 2007, p. 291). In this study references to foreign patent documents are not included, because there is a strong “home bias”: US patents tend to stay within the US patent system (Wartburg et al., 2005, p. 1594). It should be noted that a long period of time is needed after a patent is granted for the information of citations to become significant, this means that citation-based analysis will not be usable for evaluating current or very recent innovations (Hall et al., 2005, p. 34). Analyzing patent citations is easy to understand, but it is also subject to some serious drawbacks. It is very difficult to grasp the overall relationship among all the patents because a citation analysis merely indicates individual links between two particular patents (Yoon & Park, 2004, p. 38). The second problem is that the scope of analysis takes only cited information into account (Yoon & Park, 2004, p. 38). Thirdly, citation analysis has no capability of considering internal
relationship between patents (Yoon & Park, 2004, p. 38). Finally citation analysis is a time-consuming task because it needs an exhaustive search (Yoon & Park, 2004, p. 38).
By looking at ownership of highly cited patents, important firms can be identified. According to Hall et al. (2005) those firms having two or three times the median number of citations per patent display a 35% value premium, and those with 20 citations and more command a 54% market-value premium. Another thing analyzed in this research are the self citations. Self citations (the number of citations of patents owned by the same the firm) are more valuable than citations coming from external patents (Hall et al., 2005, p. 17). The self-citation variable gives us a window into technological competition, in the sense that it may inform us about the extent to which firms have internalized knowledge spillovers, or the strength of their competitive position in an industry (Hall et al., 2005, p. 35).
Science linkage
Patents can be viewed as the materializations of technologies. Patents are one of the few useful sources with a bearing on the technical properties of the invention and its relationship with features of the underpinning science (Tijssen, 2001, p. 37). This measure of inventive output is called science linkage (Hirschey & Richardson, 2001, p. 70). Science linkage is measured by the average number of
19 other references cited on the front page of a patent (Hirschey & Richardson, 2001, p. 70),
20
5. Validity, generalisability and Reliability
Validity
Validity is concerned about whether findings are really about what they appear to be about (Saunders et al., 2009, p. 157). Validity is the extent to which data collection method or methods accurately measure what they were intended to measure (Saunders et al., 2009, p. 603). Validity is not a great concern for this research since the data used from the patent databank USPTO provides the information needed for this research. The data-analysis methods used have been tested extensively in previous researches, this should lead to valid research methods.
Generalisability
Generalisability is the extent to which your results can be generalized, that is whether the findings may be equally applicable to other research settings, such as other organizations or, in the case of this research, other industries (Saunders et al., 2005, p. 158). The results of this research are not generalisable, the aim of the research is to analyze the evolution and innovation of the electric toothbrush industry, and therefore the result will be industry specific. The results might not be generalisable, but the research design is. The research conducted for the electric toothbrush can also be conducted for other industries. The USPTO has patent data concerning many other industries, the same research design can thus be applied to a different industry.
Reliability
Reliability refers to the extent to which the data collection techniques or analysis procedures will yield consistent findings (Saunders et al., 2005). The data collection technique used will lead to the same findings each and every time, since the USPTO is used as the source. Other researchers that use the same database will find the same data as is used in this research. The methods used to analyze this data are being discussed in this paper, which makes it easy to control and more reliable.
21
6. Results
In this paragraph the results of the data collection will be discussed, the interpretation of this data will be covered in the discussion.
Patent count
Based on the patent count an industry life cycle curve is drawn, as can be seen in figure one.
Figure 1
The first patent was issued on September the 14th in the year 1982, the last patent taken into account in this research was granted on the 31st of December 2013. In total between September the 14th of the year 1982 and December the 31st of the year 2013 a hundred and twenty-one patents were issued. Between the year 1982 and the year 2013 the average number of patent applications granted was 3.78125 patents per year. The highest number of patent applications granted in a year is fourteen and the lowest zero.
During the first thirteen years of the electric toothbrush industry no more than two patents were issued per year. On average between the year 1982 and the year 1994 the number of patent applications per year granted was 0.923076923 patent per year. During the following years from 1995 to the year 2001 the average number of patent applications granted per year increased to 3.142857143 patents per year. The two years after that the most patents were issued in a single
0 2 4 6 8 10 12 14 16 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Patent count
Patent count22 year, in the year 2002 and 2003 fourteen patents were issued. Then from 2004 up until the year 2010 on average five patent applications were granted. And finally in the last three years from 2011 to 2013 the average number of patent applications granted was eight. In appendix number one the number of patent applications per year can be found for each separate year.
To make it easier to identify the different stages of the industry life cycle, not only a line of the patent count has been drawn but also a trendline has been drawn. The trendline shows the moving of three-period-average-values of granted patent applications. This trendline eliminated the short-term fluctuations and thus show a smoother curve, as can be seen in figure two.
Figure 2
Firms
In total during the years from 1982 up until 2013 twenty-six firms have entered the electric toothbrush industry and were assigned to a patent. According to the patent count the first firm entered the electric toothbrush industry in 1982 and the last one that is taken into account in this research in the year 2013. On average each year 0.8125 firm entered the electric toothbrush
industry. In the years 2002 and 2011 the most firms entered the industry, in total three firms entered the industry those years. In figure three you can see the line drawn from the number of firms that entered the industry each year. In appendix number two, the number of firms and the names of the firms that entered the industry each year can be found.
0 2 4 6 8 10 12 14 16
Patent count
Patent count23
Figure 3
Number of active firms
In figure four a line has been drawn that shows the number of active firms for each year during the period from 1982 to 2013, a firm is active when a patent is assigned to it during that year. In the years 2003, 2004 and 2013 the biggest number of firms were active during a single year, five firms were active during these years.
Figure 4 0 0,5 1 1,5 2 2,5 3 3,5 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08 20 10 20 12
number of entrant frim(s)
number of entrant frim(s)
0 1 2 3 4 5 6
Number of firms active
24
Ownership of patents
Figure 5
In total twenty-six different firms have ownership of one or more patents, but not only firms can have ownership of patents some patents are assigned to the inventors of that patent. In total fourteen of a hundred and twenty-one patents were assigned to its inventors instead of to a specific firm. The other hundred and seven patents were assigned to firms. On average each firm owns 4.11538462 patents. Colgate Palmolive Company has the most patents assigned to its name,
nineteen patents in total are assigned to Colgate Palmolive Company. A firm that has almost as many patents assigned to its name is Koninklijke Philips Electronics N.V., Philips has eighteen patents assigned to its name. The third biggest firm in the electric toothbrush industry is Braun, Braun has fourteen patents assigned to its name. These three biggest firms of the industry together with the
2% 1% 12% 1% 2% 16% 1% 2% 4% 1% 15% 1% 3% 1% 12% 2% 1% 6% 1% 1% 1% 2% 3% 2% 1% 3% 5%
Concentration of patent ownership
Bausch & Lomb incorporated Blue Box Toy Factory Limited
Braun Brushpoint
Church & Dwight Co Inc Colgate Palmolive Company
Conair Corporation Hayco Manufactering Limited
HoMedics Inc Kabushiki Kaisha Izumi Seiki Seisakusho Koninklijke Philips Electronics N. V. Les Produits Associes LPA-Broxo S.A. Matsushita Electric Works, Ltd. Meritus Industries, Inc.
n/a Omron Healthcare Co., Ltd.
Optiva Corporation Panasonic Corporation
Petosan AS Professional Dental Technologies, Inc.
Pulse Innovations, Inc. Ranir, LLC
Rowenta-Werke GmbH Teledyne Industries, Inc.
The Gillette Company The Procter & Gamble Company Unilever Home & Personal Care USA, division of Conopco, Inc.
25 independent inventors account for 53.719008 percent of the industries patents. The three biggest firms own 42.14876 percent of the industries patents, and of the patents owned by firms the biggest three firms own 45.132743 percent of the patents. In figure five one can see what percentage of patents each firm owns. N/A is the accumulated percentage of the group of independent inventor’s ownership of patents. In appendix four the number of patents owned by each firm can be found.
Figure 6
In figure six the concentration of ownership of patents that were issued during the emergence stage is presented. Braun is the firm with the most patents assigned to its name, during the emergence stage. In appendix number five the number of patents assigned to each company during the introduction stage can be found.
In figure seven the concentration of ownership is presented of the patents issued during the growth stage. In appendix number six the number of patents assigned to each company during the growth stage can be found. The Colgate-Palmolive Company is firm with the most patents assigned to its name during the growth stage.
In figure eight the concentration of ownership is presented of the patents issued during the maturity stage. In appendix number seven the number of patents assigned to each company during the maturity stage can be found. Colgate-Palmolive Company and Braun are two firms with the most patents assigned to them during the maturity stage.
Blue Box Toy Factory Limited (Ko wloon, HK) 9% Braun Aktiengesellschaft (Frankfurt am Main, DE) 17% Kabushiki Kaisha Izumi Seiki Seisakusho (Matsu moto, JP) 8% Les Produits Associes LPA-Broxo S.A. (Chene C ) Meritus Industries, Inc. (Fairfield, NJ) 8% n/a 34% Teledyne Industries, Inc. (Fort Collins,
CO) 8% U.S. Philips Corporatio n (New York, NY) 8%
Concentration of ownership emergence
stage
26
Figure 7
Figure 8
Bausch & Lomb Incorporated (Rochester, NY) 4% Braun Aktiengesellschaft (Frankfu rt am Main, DE) 5% Colgate Palmolive Company (New York, NY)
21%
Conair Corporation (Stamfo
2% HoMedics, Inc. (Commerce
Township, MI) 9% Koninklijke Philips Electronics N.V. (Eindhoven, NL) 5% Matsushita Electric Works,
Ltd. (Kadoma, JP) 5% n/a 11% Optiva Corporation (Snoqualmie, WA) 2% Professional Dental Technologies, Inc. (Batesville, AR)
2% Pulse Innovation s, Inc. (Ontar io, CA) 2% Rowenta-Werke GmbH (Offenbach a.M., DE) 7% Teledyne Industries, Inc. (Fort Collins, CO)
4%
The Procter & Gamble Company (Cincinnati, OH)
4%
U.S. Philips Corporation (New York,
NY) 9% Unilever Home & Personal
Care USA, division of Conopco, Inc. (Greenwich,
CT) 11%
Concentration of ownership during the growth stage
Braun GmbH (Kronberg, DE)
25% Church & Dwight Co.,
Inc. (Princeton, NJ) 9% Colgate-Palmolive Company (New York,
NY) 29% Koninklijke Philips Electronics N. V. (Eindhoven, NL) 9% Matsushita Electric Wo rks, Ltd. (Osaka, JP) 4% n/a 8% Ranir/DCP Corporation (Grand Rapids, MI) 4% The Gillette Company (Boston, MA)
4% The Procter & Gamble
Company (Cincinnati, OH)
8%
27 In figure nine the concentration of ownership is presented of the patents issued during the decline stage. In appendix number eight the number of patents assigned to each company during the decline stage can be found.
Figure 9
Patent activity top three firms
Braun
Braun is the firm with the third most patents assigned to its name in the electric toothbrush industry. In total fourteen patents were assigned to Braun, which is 11.570248 percent of the total amount of patents issued in the electric toothbrush industry. In figure ten one can see when these patents were assigned to Braun, and in appendix nine you will find the number of patents assigned to Braun each year. Figure 10 Braun GmbH (Kronberg E) 10% Hayco Manufacturing Limited (Causeway Bay, HK) 10% n/a 20% Omron Healthcare Co., Ltd. (Kyoto, JP) 20% Panasonic Electric Works Co., Ltd. (Osaka, JP) 10% Petosan AS (Haukeland, NO) 10% Ranir, LLC (Grand Rapids, MI) 20%
Concentration of ownership during the decline
stage
0 1 2 3 4 5 6 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08 20 10 20 12Patents assigned to Braun
Number of patents assigned to Braun
28 The first patent assigned to Braun was issued in the year 1982. The last patent assigned to Braun was issued in the year 2013. The other twelve patents that are assigned to Braun were issued during the time period between 1982 and 2013. The most patents were issued in the year 2007, in 2007 five patents issued were assigned to Braun.
Koninklijke Phillips N.V.
The firm with the second most patents assigned to its name is Koninklijke Philips N.V. In total
eighteen patents were assigned to Philips, which is 14.876033 percent of the total amount of patents issued in the electric toothbrush industry. In figure eleven you can see when these patents were assigned to Philips, and in appendix ten you will find the number of patents assigned to Phillips each year.
Figure 11
The first patent assigned to Philips was issued in the year 1992. The last patent assigned to Phillips was issued in 2013. The other sixteen patents were issued during the time period from 1992 and 2013. In 2009 and 2012 the most patents were issued, during these two years five patents that are assigned to Philips were issued.
Colgate-Palmolive Company
The firm with the most patents assigned to its name is Colgate-Palmolive Company. In total nineteen patents were assigned to Colgate-Palmolive Company, which is 15.702479 percent of the total amount of patents issued in the electric toothbrush industry. In figure twelve you can see when these patents were assigned to Colgate Palmolive Company, and in appendix eleven you will find the number of patents assigned to Colgate Palmolive Company each year.
0 1 2 3 4 5 6 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08 20 10 20 12
Patents assigned to Phillips
Number of patents assigned to Phillips
29
Figure 12
The first patent assigned to Colgate-Palmolive Company was issued in the year 2002. 2002 was also the year Colgate-Palmolive Company was the most active with five patent applications assigned to them in a year. The other fourteen patents that were assigned to Colgate-Palmolive Company were assigned to them during the years from 2003 until 2008.
Patent citations
The total count of forward citations is 1269 citations, the average number of forward citations per patent is 10.48760331 citations per patent. The total number of forward citations that are cited by the same firm as the original patent is from is 180, the average number of forward self-citations by firms is 1.682242991 per patent. The total number of self forward citations of the inventor(s) is 65, the average number of self forward citation of the inventor(s) per patent is 0.537190083 citation. The median number of forward patent citations is 6 forward citations. 38 patents have more than twice the median number of citations, so thirteen or more forward citations. 25 patents have more than three times the median number of forward citations, so nineteen or more forward citations. The highest number of forward citations is seventy and there are twenty-nine patents with zero forward citations.
Knowledge spillover
The total number of backward citations is 1143 citations, the average number of backward citations is 9.9446280992 citations per patent. None of the patents has zero backward citations, and the
0 1 2 3 4 5 6 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08 20 10 20 12
Patents assigned to Colgate-Palmolive
Company
Number of patents assigned to Colgate-Palmolive Company
30 highest number of backward citations of a single patent is 139 backward citations. From these 1143 backward citations 149 are self-citations from firms, on average a patent has 1.392523364 citations to patents owned by the firm itself. The highest number of backward citations to patents owned by the firm itself is twelve, two patents have twelve self backward citations. The lowest is zero self backward citations, fifty-four patents have zero self backward citations. Inventor(s) use 0.429752066 backward citations on average per patent. The highest number of self backward citations by the inventor(s) is four, two patents have 4 backward citations to other patents designed by the inventor(s). The lowest number of self backward citations by the inventor(s) is zero, eighty-eight patents have zero self backward citations to patents designed by the inventor(s).
Science linkage
The total number of other references of the patents of the electric toothbrush industry is 54, the average number of other references is 0.446280992 per patent. The highest number of other references in one single patent counted was five. Ninety patents have no other references
mentioned. Of these 54 references only one was to a scientific paper, the rest of them were other references to books, reports and other nonscientific literature. This means that the average reference to a scientific source is only 0.008264463 scientific references per patent.
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7. Discussion
Industry life cycle
Based on patenting data the emergence of the electric toothbrush industry started on the fourteenth of September year 1982. In this year the first patent was issued. During the introduction phase the number of patent applications is low and only slowly increasing. The emergence or introduction stage took place from the year 1982 until 1994. During these first thirteen years of the electric toothbrush industry no more than two patents were issued per year. On average between the year 1982 and the year 1994 the number of patent applications granted per year was 0.923076923 patent. In total twelve patents were issued during the emergence stage, and seven different firms entered the electric toothbrush industry. These seven firms accounted for eight of the twelve patent applications, the other four were not assigned to a specific firm but to the inventor(s). The average active firm owns 1.14285714 patents during the emergence stage. During the emergence stage Braun was the most important firm with seventeen percent of the total number of patents assigned to its name.
The growth stage started in the year 1995 and went on until 2004. The number of patent applications increases; the average number of patent applications issued during these years was 5.7 patent per year. In total twenty-six firms entered the electric toothbrush industry, during the growth stage eleven of them entered the industry. In total 57 patent applications were issued during the growth stage, 51 of those are assigned to fifteen different firms the other six are assigned to inventor(s). The average active firm owns 3.4 patents during the growth stage. The increase in new firms did not lead to a decrease of the concentration ratio of ownership of the patent application as was to be
expected based on the theoretical framework (Haupt et al. 2007). In the growth stage Colgate-Palmolive Company was the most innovative and active firm with twenty-one percent of the patents issued during this stage assigned to its name.
The growth stage is followed by the maturity stage. The maturity stage of the electric toothbrush industry starts in 2005 and ends in 2008. The total number of patent applications issued in these years is twenty-four. The average number of patents issued is 6 per year. As could be expected based on the theoretical framework the number of patent applications remained constant during this stage, it went from an average of 5.7 patents per year during the growth stage to 6 patents per year during the maturity stage. Of this total of twenty-four patents twenty-two were assigned to a firm and the other two patents were assigned to its inventor(s). The average active firm got 2.75 patent assigned to its name during the maturity stage. During the maturity stage only three new firms entered the
32 industry. Like during the growth stage in the maturity stage Colgate-Palmolive Company was the most active and innovative firm, with twenty-nine percent of the patents issued during this stage assigned to its name, closely followed by Braun with twenty-five percent of the patents assigned to its name.
The following stage is the decline stage. In the decline stage the number of patents applications decreases. The decline stage of the electric toothbrush industry started in the year 2009 and it ended in the year 2011. In total ten patents were issued during the decline stage, the average number of patents was 3.33 per year. The average number of patent applications dropped from 6 per year during the maturity stage to 3.33 per year during the decline stage. During the decline stage four new firms entered the industry. Of this total of ten patents, eight were assigned to firms and the other two to the inventor(s). The average active firm owned 1.33 patents during the decline stage. In the case of the electric toothbrush industry the decline stage is followed by a new growth stage. This new growth might be the start of a new S-shape curve. This new growth stage starts in the year 2012 and at least goes on until 2013. During these two years eighteen patents were issued, which means on average nine per year. During these two years one new firm entered the industry. When this stage will end cannot be predicted based on the available data.
In figure thirteen all the different stages of the industry life cycle can be seen.
33
Innovation patterns
The electric toothbrush industry starts of as a Schumpeter Mark I innovative pattern. A major role in the innovation activities is played by the new entrants. During the emergence stage seven firms enter the industry and on average these firms issued 1.14285714 patents during the emergence stage. The innovative activities were widening during this stage. The number of new entrants per year doesn’t really change al lot during the entire industry life cycle as can be seen in figure three in the paragraph of the results. The active number of firms increases in the growth stage, decreases during the decline stage and grows again in the second growth stage of the industry life cycle as can be seen in figure four in the paragraph of the results. Based on this data one could say that the industry is widening in a very constant way during the industry life cycle, and is deepening in the growth stage of the industry life cycle. Based on the figures ten till eleven of the three most important and active firms of the electric toothbrush industry one could say that the industry start changing to a Schumpeter Mark II pattern of innovation since somewhere around the year 1994. The three biggest firms (Braun, Phillips and Colgate-Palmolive Company) started to become more active and the concentration ratio of ownership started to grow.
Important patents
The results show that twenty-five patents have more than three times the median number of forward citations. These patents are the patents with the highest impact factors, and thus the most important patents of the industry. Colgate-Palmolive owns the most of these high-impact patents; it owns five of these patents which adds up to twenty percent. Braun owns the second most of these high-impact patents; it owns four of these patents, which is sixteen percent. The ownership of the other sixteen high-impact patent is spread (14 patents) over eight other firms and (2 patents) inventor(s). Thus based on the forward citations the same conclusion can be drawn that Braun and Colgate-Palmolive Company belong to the most important firms.
The most important patents were issued between 1982 and 2006. The patents with the highest impact factors were issued during the emergence and growth stage. In the year 2003 the most high-impact patent were issued, in total four. It was to be expected that the patents from recent years had lower impact factors because it takes time for patents to receive a lot of forward citations. The total number of forward citations that are cited by the same firm that owns the original patent is 180, the average number of forward self-citations by firms is 1.682242991 per patent. In total there are forty patents with self forward citations by firms. The majority of those are owned by the
34 companies; Braun (25%), Phillips (20%) and Colgate-Palmolive Company (37%). This is another implication that these three firms are the most important firms of the electric toothbrush industry.
Science linkage
The total number of other references of the patents of the electric toothbrush industry is 54, the average number of other references is 0.446280992 per patent. The highest number of other references in one single patent counted was five. Ninety patents have no other references
mentioned. Of these 54 references only one was to a scientific paper, the rest of them were other references to books, reports and other nonscientific literature. This means that the average
reference to a scientific source is only 0.008264463 scientific references per patent. This shows that the innovations in the electric toothbrush industry are in general not based on basic science.
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8. Limitations and opportunities for further research
The first limitation of this research was that it had to be conducted within a limited time range of three months. As a consequence not all the patents of the electric toothbrush industry could be studied, but within the industry group of the USPTO the scope had to be narrowed. This means that the results presented in this research will not give a perfect representation of the true evolution of the electric toothbrush industry. Another consequence is that there is just not enough time to find out everything there is about the firms and the patents. The second limitation is that for this research I have chosen to study the evolution of the electric toothbrush industry only by using the information given by patent data, this one-sided approach might not tell the entire story.
The first opportunity there is for future research is to conduct the same research, again for the electric toothbrush industry and then study all the available patents. Of course this research could also be conducted for other industries. Another opportunity is to conduct this study but also study the industry using other data-sources and find out if, based on other date, the same conclusions can be drawn.
