Technological Catch-Up: Measuring Firm Innovation Through Patent Activity

Technological catch-up is characterized by firms' efforts to stimulate innovation (Tech_p) and reduce the technological gap (Tech_g). This study posits that a firm's level of innovation can be effectively measured by its patent activity. Acknowledging the inherent time lag in the patent application process, we utilize lagged one-period data on patent applications of publicly listed firms as a proxy for their innovation output.