Patent Strategy Based on Performance Feedback

An Exploratory Case Study of Samsung Electronics

성과피드백을 기반으로 한 특허전략 : 삼성전자 탐색적 사례연구

저자 Hyeonsuh Lee, Sung Joo Bae

(Authors)

출처 연세경영연구 55(3), 2018.10, 133-157(25 pages)

(Source) Yonsei Business Review 55(3), 2018.10, 133-157(25 pages)

연세대학교 경영연구소
발행처
Yonsei Business Research Institute
(Publisher)

URL http://www.dbpia.co.kr/journal/articleDetail?nodeId=NODE07549501

APA Style Hyeonsuh Lee, Sung Joo Bae (2018). Patent Strategy Based on Performance Feedback. 연세경영연구,
55(3), 133-157

이용정보 Australia Monash University(모나쉬대학교)

130.194.***.155
(Accessed) 2022/03/14 16:35 (KST)

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연세경영연구 제55권 제3호(통권 제109호)
Yonsei Business Review Vol. 55, No. 3 (2018), 133-157

성과피드백을 기반으로 한 특허전략:

삼성전자 탐색적 사례연구
Patent Strategy Based on Performance Feedback: 
An Exploratory Case Study of Samsung Electronics

이 현 서 Hyeonsuh Lee*
배 성 주 Sung Joo Bae**

ABSTRACT
In this research, patent search process is introduced as technology-intensive firms’
learning mechanism. The patent search strategy is a firms’ effort to develop patents in a
field that firms consider important for their performance. It is important to know how
firms adjust their patent search strategy in the long term. This study is an exploratory
case study on Samsung Electronics, to show how firms change or maneuver patent
search strategy in a longitudinal situation under performance feedback mechanism. Our
argument is 1) that firms change their patent strategy responding to the performance
feedback, and 2) that firms also change their patent strategy in a specific direction that is
suggested by the performance feedback literature.

Key Words: patent strategy, performance feedback model, technology search structures

논문접수일：2018년 10월 1일 1차 수정일：2018년 10월 15일 게재확정일：2018년 10월 15일

** 일리노이 주립대학 경영대학 박사과정 (E-mail: hl15@illinois.edu)
** 연세대학교 경영대학 부교수, 교신저자 (E-mail: sjbae@yonsei.ac.kr)

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요 약
기술기반 기업들의 특허활동을 통해 우리는 기업들이 어떠한 방식으로 또는 어떠한 방
향으로 기술탐색을 수행하는지에 대해 알 수 있다. 장기적으로 기업들이 어떻게 기술탐색
을 수행하는지에 대해서는 기존문헌에서 많이 연구가 되지 않았는데, 이는 기술탐색을 특
정한 방식으로 하게 하는 원인을 명확히 규명해 내지 못했기 때문이다. 기술탐색과 특허전
략은 밀접한 연관이 있다. 특허를 어떤 기술에 관해 취득하는지는 연구개발의 결과라고 볼
수도 있지만, 이러한 특허를 출원/등록에 관한 의사결정은 기업의 연구개발 방향을 설정
하는 기술전략과 밀접한 연관이 있기 때문에, 기술탐색의 과정 자체가 특허전략에 반영되
어 나타나는 것으로 볼 수 있기 때문이다.
본 연구는 삼성전자의 특허전략을 살펴봄으로써 탐색적인 사례연구를 수행하고자 한다.
삼성전자의 2009년부터 2013년까지의 특허전략을 살펴봄으로써, 기술기업의 기술탐색이
성과피드백 모델과 밀접한 연관이 있음을 보여주는 것이 본 연구의 궁극적인 목표라 할 수
있다. 사례연구에서 보여 지듯이, 기술기업은 성과피드백에 입각하여 기술탐색을 하는 경
향을 보이며, 또한 성과피드백 모델에서 제시하는 것과 일치하게 성과가 기업이 추구하는
정도보다 부족할 때 탐색의 깊이는 증가하고, 탐색의 범위는 좁혀지는 형태의 기술탐색활
동을 수행한다.

한글색인어: 특허전략, 성과피드백 모델, 기술탐색

I. INTRODUCTION
It is important for technology-intensive firms to understand the technological
environment that they face in order to come up with a sustainable firm strategy. Firms
obtain various types of information from various types of environments which can be
categorized in multiple boundaries based on the information each environment provides
(Dougherty, 1990). Among those environments, the technological environment is crucial
for technology-intensive firms due to its characteristic of uncertainty and the possibility
of gaining competencies from it (Burgelman & Rosenbloom, 1997). This is especially
true since the technological environment is characterized by complexity and the fast rate
of change (Duncan, 1972; Jukovich, 1974). Complexity means “heterogeneity of external
events relevant to organizations” (Child, 1972) and rate of change means how fast the

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elements and the structure of an environmental change.

The environment creates both problems and opportunities that organizations should
cope with (Daft et al., 1988) since firms depend on the environment for resources. At the
same time, the environment affects organizational structure, internal processes and
decision-making (Duncan, 1972; Pfeffer & Salancik, 1978). In the technological
environment, a patent is an important indicator of knowledge that organizations possess,
and especially for tech-intensive firms, it represents a firm’s technological capability.
Firms possess patent portfolios in order to survive in a turbulent environment (Granstrand,
1998), and this is the result of firms’ search process surrounding the technological
environment. This is because most of the firms’ technologies are not solely developed by
internal knowledge exploitation, but in fact, they are externally influenced (Katz, 2001).
Patents, as a result, become one of the important information that firms should acquire in
order to increase their capability and as a source of gaining the competitive advantage.
Various empirical studies found out the positive relationship between patent and firm
performance (Austin, 1993; Comanor & Scherer, 1969; Narin et al., 1987; Schere, 1965)
and this shows the behavior of tech-intensive firms to constantly develop patents as a
strategy and they go through a set of learning process in order to cope with challenges
that lie in front of them.
Search is one of the methods that tech-intensive firms acquire knowledge especially
under the uncertain technological environment (Huber, 1991). Tech-intensive firms go
through a learning process simply by being exposed to an uncertain environment (Daft et
al., 1988). Learning process of firms is composed of a linear process initiating from
knowledge acquisition, and then leads to information distribution, information
interpretation and organizational memory (Huber, 1991). In an ambiguous environment,
the first construct of the learning process, which is the knowledge acquisition, is
strategically important for firms to attempt to solve problems they encounter (Hambrick,
1982). One of the processes that organizations acquire information is through searching.
This mechanism occurs in three steps: (1) scanning, (2) focused search, and (3)
performance monitoring (Huber, 1991). Scanning is a wide-range sensing of an
organization’s external environment and focused search behavior is searching in a narrow
segment of the organization’s environment in response to suspected opportunities.

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Performance monitoring is the final step of search mechanism and it monitors focused
and wide-ranging sensing of the organization’s performance based on pre-established
goals.
In this research, a patent search process is introduced as a way of technology-intensive
firms’ learning mechanisms. The patent search strategy is a firms’ effort to develop
patents in a field that firms consider important for their performance. A few empirical
research is conducted with the concept of firms’ patent search behavior. Rosenkopf and
Nerkar (2001) describe patenting as one of the search behaviors of a firm and Katila and
Ahuja (2002) use a patent as a key resource for a search process that leads to the success
of product development. However, there is little research regarding patent search in a
longitudinal and complex situation given that it is important to know how firms adjust
their patent search strategy in the long term. Also, there is scant literature investigating
performance monitoring stage after the patent search is conducted. This study is an
exploratory case study on Samsung Electronics, to figure out how firms change or
maneuver patent search strategy in a longitudinal situation under performance feedback
mechanism. The research question is “whether and how firms change their patent
strategy in response to performance feedback?” We attempt to contribute to the existing
literature by investigating three issues: 1) applying performance feedback model to a
patent search of firms, 2) developing a patent search adjustment model, and 3) providing
a managerial implication for tech-intensive firms regarding how to manage a patent
portfolio.

II. THEORETICAL BACKGROUND

2.1 Learning through search

As previously mentioned, knowledge acquisition and learning through search is

especially crucial for firms facing uncertain and turbulent environments. The uncertainty
of an environment itself will not lead to a scanning behavior, but perceived importance
should be in presence in order to initiate the search process (Pfeffer & Salaneik, 1978).
Therefore, the perceived uncertainty and the importance of the environment sector

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should be jointly considered in evoking the scanning behavior of firms. Environment

scanning is a key step in the process of firm adaptation to the changing environment
(Nishi et al., 1982) and this behavior has a positive relationship with performance when
combined with strategic boundary spanning activity (Dollinger, 1984) which is a firms’
opportunity-seeking behavior outside their organizational boundary. Moreover, acquiring
information from the external environment through scanning is vital for organizations
(Tushman & Katz, 1980), since the knowledge would assist management in planning the
organization’s future courses of action (Aguilar, 1967; Auster & Choo, 1993). Environment
scanning can also be treated as external communication that is an important source of
developing successful market-oriented products (Allen, 1971).
In most cases, a search is the response to certain problems that the firm needs to
resolve. However, there is another stream of research that explains a search process as a
proactive behavior (Astley & Van de Ven, 1983). In opportunity seeking perspective,
search behavior of a firm is a proactive behavior by sensing environment vulnerability
according to their search initiation threshold (Mintzberg et al., 1976). Initiation threshold
may vary from organization to organization based on the environmental context.
The final step of learning through search is a performance monitoring. Organizations
routinely monitor how much they satisfy their standards (Huber, 1991). Performance
feedback model enlightens us how performance monitoring behavior affects the strategy
formulation in that the feedback will affect the next strategy that firms may take. There
are two types of search which are problemistic search (Cyert & March, 1963), and slack
search (Lopes, 1987). Problemistic search is initiated when managers figure out that
organization performance is below their aspiration level and slack search is generated by
a high level of resources, created by performance above aspiration level. These search
types largely depend on the performance of firms whether it is above or below the
aspiration level. Organizations interact with the environment through the performance
feedback process (Cyert & March, 1963) and managers use the performance feedback to
control upcoming search and decision making (Greve, 2003).

2.2 Patent search strategy

In this research, a patent search strategy encompasses all three steps of search

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processes from scanning to performance monitoring. First, firms broadly scan the
technology environment in order to find the field that seems adequate for developing
patents. Second, based on the decision in what field to develop patents, firms narrowly
search the specific technological field and develop patents in that field. In this step, firms
decide the scope of technology field that they will focus on and how deeply they engage
in developing patents in that field. Third, with developed patents, firms monitor the
performance feedback based on the developed patents’ performance and decide a further
strategic direction for patent search strategy.
Prior research regarding patent search process mainly focuses on search scope and
depth showing that adequate patent search leads to an increased impact of proceeding
patents and development of new products (Katila & Ahuja, 2002; Rosenkopf & Nerkar,
2001). Technology-intensive firms are more prone to conduct a proactive search since
each firm confronts different environmental vulnerability based on the strategy that firms
formulate and implement (Astley & Van de Ven, 1983). With the assumption that firms
conduct proactive patent search, it would be important to figure out in what circumstances
firms initiate certain search strategy and why and how firms adjust their patent search
strategy. This is because a patent search process is not a one-time event, but continuously
changing strategic behavior that tech-intensive firms conduct.
Assuming that developing patents is the result of organization’s strategic decision, the
process of this decision making in uncertain environment revolves around a cycle of
environmental scanning, interpretation, and learning with implications (Daft & Weick,
1984). In this set of process, we argue that tech-intensive firms interact with the environment
through the performance feedback process. When firms receive performance feedback
from the external environment on goals determined by the organization, managers utilize
this performance feedback to adjust a search process (Cyert & March, 1963).

2.3 Search depth and search scope

Firms can decide not only the extent that they seek to innovate, but also whether to
emphasize exploitative innovations or explorative innovations (Greve, 2007). In the
search process mentioned before, firms go through a linear process of scanning
focused search performance monitoring. Several authors used patent data as an

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indicator of these search related activities (Katila & Ahuja, 2002; Rosenkpof & Nerkar,
2001; Stuart & Podolny, 1996). In this sense, the current patent strategy would be the
result of past search process and performance feedback. Through this learning process,
firms search for solutions to problems and position themselves in a search scape that
spans from exploitation to exploration (March, 1991). The patent strategy in a link with
search process can be divided into a dimension of search scope and depth (Katila &
Ahuja, 2002) and organizational and technological boundary-spanning search
(Rosenkpof & Nerkar, 2001). These concepts of search scope and depth correspond to
the theoretical notion of exploration and exploitation of new knowledge (Katila & Ahuja,
2002; Greve, 2003). The patent search strategy is an effort of firms to solve a problem
(Katila & Ahuja, 2002) and its depth and scope is the representation of how firms
manage the problem. The search depth is conceptualized as the degree of use and reuse
of firms’ existing knowledge and capabilities and the search scope as how widely a firm
explores new knowledge in order to solve a problem.

2.4 Performance feedback model and adjustment of patent search strategy

The aspiration level is the key factor that drives firms’ behavioral change since it is a
reference point that firms try to attain (Frank, 1935; Kameda & Davis, 1990). There are
four ways of explaining how organizational aspirations are made: 1) natural aspiration
level, 2) historical aspiration level, 3) social aspiration level, and 4) direct learning
(Greve, 2003). Based on these different types of aspirational level, each firm holds
different attitude towards initiating and adjusting patent search processes. Among these
possible criteria for setting aspiration model, social aspiration level is the optimal way to
measure in case of patent search. This is because for an organization in a turbulent and
uncertain environment, social aspiration level is more valuable than other criteria since
fast changes in the environment make it meaningless to compare current performance
with past histories (Greve, 2003). For example, it is not adequate to compare the current
status of sales with past sales data especially in a rapidly changing environment and this
makes the absolute comparison of sales obsolete.
Firms cannot search the entire patent literature and only focus on the certain area of
patents. The area of focused search represents the field that firms consider important at

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the time of setting a patent strategy. As a result of firms’ decision making, firms choose
where to focus, how many fields to focus, and how much they will engage in each field.
Then, the performance of chosen strategy shows whether it was effective or not. In the
presence of performance feedback, firms might consider various strategic options in
order to meet the goal. Based on the result of performance, the strategy of further search
process varies. When the performance is below the aspiration level, firms execute
problemistic search which firms accept more risky solutions (Kahneman & Tversky,
1979). On the contrary, when the performance is above the aspiration level, firms start
slack search in the expectation of attaining long-term goals rather than solving immediate
problems (March, 1991). Based on these two different search mechanisms, it would be
possible to figure out how firm adapt to an environment. Figure 1 depicts the patent
search process tied to the performance feedback the firm receives as a result of previous
strategy.

Observe feedback
from technological
environment

Evaluation
Yes No
Is th goal fulfilled?

No Deliver problem to
Increase problemistic decision making
search
Search Deliver solution to
Slack search decision making

Decide patent search

strategy based on risk
Decision tolerance, solutions,
and problems

Decrease risk
Increase risk tolerance
tolerance

[Figure 1] Performance-based adjustment of patent search (revised from Greve, 2003)

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2.5 The trade-off between patent search strategies

Adaptation process in search strategy occurs since firms cannot exploit new market
opportunity only from one search strategy especially in the case of fast technological
change due to imminent uncertainty (Dosi, 1988). Based on the interview with a manager
from Samsung’s patent department, Samsung discerns few competitors and seldom tracks
their patent strategies in order to formulate their own patent strategy. It is obviously very
difficult for firms to discern which firms will be the one who first copes with the
turbulence, develops new technologies and leads the innovation (Wade, 1996). Thus firms
engage in broad patent search strategy. Rosenkopf and Nerkar (2001) describe patent
search as one of the search behaviors of firms and show technological boundary spanning
leads to an increased impact of patents. These results can be explained by two
perspectives. First, the increased knowledge pool through a broad scope allows firms to
have more choices in problem solving that leads to a product innovation (March, 1991).
Second, the search scope increases firm’s opportunity to do a recombinatory search
(Fleming & Soresnson, 2001; Nelson & Winter, 1982). An increase in scope adds new
elements to the set, improving the possibilities for finding a new and useful combination.
However, there is another perspective viewing the narrow search scope as an optimal
strategy for firm innovation. Firms can obtain ‘first-order competence’ through a narrow
patent search and develop it as the distinctive competence of firms (Leonard-Barton,
1995). Also, by accumulating competency in one specific segment, firms can gain high
status in the field (Nagarajan & Mitchell, 1988; Rosenkpof & Tushman, 1998). To sum
up, a broad patent search might hamper firm innovation in two ways. First, the broad
search can increase the cost of integrating new findings since common interfaces need to
be established between old and new knowledge elements. Also, new knowledge requires
changes in linkages of existing knowledge which challenges organization (Henderson &
Clark, 1990). Second, there is a decreasing reliability since the proportion of new
knowledge is high when firms search information broadly (Cyert & March, 1963).
Based on these traits, firms might constantly seek for an optimal way to search patent;
whether broad or narrow. There should be an impetus that leads firms to measure their
search strategy and adjust their search processes in order to obtain their goals. This
adaptation process can be explained by performance feedback of organizations.

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III. PROPOSITIONS
As a proactive entity, firms constantly monitor their own performance based on their
social aspiration level (Greve, 2003). When firms failed to achieve their aspiration level,
problemistic search is triggered (Cyert & March, 1963). Through problemistic search,
firms seek to mend performance shortfalls and increase their goal-oriented behaviors.
When this search mechanism occurs due to a failure of attaining social aspiration level,
firms start to conduct search near the problem symptom and they are more prone to move
in the same direction rather than to disperse their search directions (Amburgey & Miner,
1992; Kelly & Amburgey, 1991). However, firms below the social aspiration level are
usually short of resources to mobilize since failure itself means a lack of resources.
Therefore, firms seek to improve their existing technology (Miller & Friesen, 1982) and
escalate resources committed to the current strategy (Noda & Bower, 1996). Also, when
firms fail to attain their goal, they are more prone to take risks (Kahneman & Tversky,
1979; Lopes, 1987; Schneider, 1992; Thaler & Johnson, 1990).
A proposition regarding search depth and search scope can be based on the mechanism
composed of risk taking, problem solving and resource mobilization. Increasing the patent
search depth demonstrates a firm’s behavior of concentrating on specific technology and
put most of their effort on a chosen path. And this chosen path represents the area in
which firms consider as being relevant to solve imminent problems caused by the failure
of attaining the aspiration level. In the context of patent search strategy, increasing the
search depth is one of the behaviors that firms take more risks. This is explained by the
opposite case in which firms try to possess a broad patent portfolio in order to reduce the
risks by expanding the search span and scanning the technological environment
(Granstrand, 1998). Focusing on a certain field of patents, therefore, is a more risk-taking
behavior for firms compared to broadening their search. Also, as a result of problemistic
search, firms search around the problem area and focus on developing patents that are
relevant to the problem issue (Amburgey & Miner, 1992). Similarly, firms also escalate
resources committed to the relevant technology that firms possess at that time. In the
perspective of resource mobilization, the tendency of firms to concentrate resources on the
problem area and to escalate resources committed to a focused strategy would be the
result of failure to attain aspiration level (Nohria & Gulati, 1996).

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P1: When tech-intensive firms fail to attain the aspiration level, they will shift their
patent search strategy by increasing their search depth.

The problemistic search makes firms goal-oriented to solve the imminent problem.
Rather than making a decision based on high potential that technology presents for the
future (Levinthal & March, 1981), firms are bounded to short-term problem-solving or
profit-oriented approach in technology search. This makes firms to give up long-term
opportunities which can be represented as increased diversity of technology pool
(Hambrick & Snow, 1977) and narrow the search scope. In addition, firms tend to seek
improvement in an existing technology and this behavior results in a reluctance to
broaden the technology scope. Moreover, firms that fail to attain aspiration level are
normally in short of resources to mobilize compared to firms which attain aspiration
level and gain a significant pool of resources called ‘slack’. Slack is defined as the pool
of resources in an organization including redundant employees, unused capacity, and
unnecessary capital expenditures (Nohria & Gulati, 1996). With these slack resources,
firms are able to engage in slack search, or experimentation (Levinthal & March, 1981).
However, when firms fail to achieve aspiration level, resources available for mobilization
become limited. Due to the lack of relevant resources, firms narrow the search scope and
concentrate on increasing the search depth.

P2. When tech-intensive firms fail to attain the aspiration level, they will shift their
patent search strategy by narrowing their search scope.

Patent search depth

+
Fail to attain the
aspiration level
-
Patent search scope

[Figure 2] Conceptual model

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Search scope
Search depth

Aspiration- Aspiration-
performance performance

[Figure 3] Aspiration-performance and adaptation of patent search strategy

IV. THE CASE OF SAMSUNG ELECTRONICS

Case study research has been advocated and used as a valid research methodology in
various fields such as marketing (Bonoma, 1985), operations management (McCutcheon
& Meredith, 1993) and strategy (Eisenhardt, 1989). Various objectives of the case study
are suggested and in this research, the major reason to use case study methodology is to
examine the validity of propositions in a highly complex and broad research topic.
Further empirical research with more data set should be conducted as long as the
propositions present some validity in the phenomenon.
A case study of an organization that holds various patent portfolios with diverse
business sector can advance the understanding of these hypothesized mechanisms and
provide further direction for empirical research. Samsung Electronics is one such
organization. There are several reasons why we chose Samsung electronics as the target
for case study. First, Samsung electronics is one of the world top patent developers and
operate a separate patent organization actively. Therefore, it is an idealistic firm to
demonstrate how firms conduct a patent search strategy with intention and means to
execute patent strategy. Second, Samsung Electronics has gone through patent litigation
with Apple Inc., which might affect the social aspiration level that Samsung electronics
has. It is an idealistic setting to examine how firms adjust their patent search strategy
below its aspiration level. In analyzing Samsung Electronics’ patent search strategy, this

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research focused on its adaptation of patent search strategy in response to some visible
performance feedback.
In the spring of 2011, Apple began the litigation against Samsung in patent infringement
suits. Apple’s litigation over technology patents is known as “smart phone patent wars”
since Apple litigated extensively on the global market for mobiles. On June 30, 2011,
Samsung counter litigation began against Apple and successive patent litigation
occurred. By August 2011, Apple and Samsung were litigating 19 ongoing cases in nine
countries. By October, the legal disputes expanded geographically to ten countries. By
July 2012, the two companies were in more than 50 legal disputes around the world. The
origin of this patent war between Samsung and Apple is when Apple sued Samsung
alleging that Samsung’s Android phones (Nexus S, Epic 4G, Galaxy S 4G, and the
Samsung Galaxy Tab) infringed on Apple’s intellectual property. In the category of
intellectual property of Apple, patents, trademarks, user interface and style are included.
This patent litigation between Apple and Samsung occurred around the globe several
times and most of the suits were initiated between the year 2011 and 2012. Therefore, in
this research year 2011 and 2012 would be the point when Samsung received feedback
from the technology environment, which is the patent litigation, and shifted its patent
search strategy.
In order to understand how Samsung Electronics operates and manages patents,
several interviews were conducted with a specialist in a patent organization from April
2014 to June 2014. Basic questions regarding organization structure of Samsung patent
department were asked and specific questions such as measurement of patent performance,
a process of integrating patent information and internalization of information, roles of
each patent department were asked.
To supplement these interviews, we conducted a quantitative analysis with patent data.
With the expectation that Samsung Electronics’ patent data would show the pattern that
supports the proposition, 21,870 patent application data from 2009 to 2013 were
collected from KIPRIS (Korea Intellectual Property Rights Information Service). In
assembling patent data, we used the application date to categorize the data set.
Patent data developed from 2009 to 2013 was gathered by keyword search of applicant
‘Samsung electronics’. Firms’ patenting activities were used to indicate the result of

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patent search strategy. Several scholars have used patents as a measure of knowledge and
problem-solution (Dutta & Weiss, 1997; Henderson & Cockburn, 1994; Jaffe et al.,
1992). Each patent contains information about the inventor, the company to which the
patent is assigned, and technology classifications that each patent is related. In this
research, categorization of technology class is used to measure search depth and search
scope of firms. We searched the manual of classification for the patent system to find the
technical classes and subclasses and match with the part of business department.
Extensive analysis of the patent classification system from Miyazaki (1995) was referred.

<Table 1> Components of technology classification system of patent (example)

Section Class Sub-class
H01L (semiconductor devices;
H01 (basic electric elements)
H (electronics) electric solid state devices)
H04 (electric communication technique) H04N (pictorial communication)
G03F (photomechanical production
G (physics) G03 (photography; cinematography)
of textured or patterned surfaces)

The search depth describes an accumulation of search experience with the same or
similar knowledge elements. Among the possible solutions that firms search, firms might
continuously develop patents in technology class that they used to develop. Thus, search
depth can be represented as the concentration rate of technology sub-class and
Herfindahl index is used for this purpose. The Herfindahl index is originally a measure
of the size of firms in relation to the industry and an indicator of the amount of
competition among them. It can range from 0 to 1, moving from a huge number of very
small firms to a single monopolistic producer. Increases in the Herfindahl index
generally indicate a decrease in competition and an increase of market power and this
can be applied in this research indicating the concentration rate of certain technology
sub-section. High index score represents that the sample is skewed or concentrated in
specific parts. Concentration rate is measured based on technology-subclass, since it
describes more specifically what the technology is used for.
The search scope corresponds to the theoretical notion of exploration behavior
searching for solutions. While Katila and Ahuja (2002) used newly used citation as a

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measure of a search scope, we measured the search scope by counting the number of
technology sub-classes. This is because developing a patent is stronger and more
accurate signal that firm searches the field for solutions. Therefore, rather than using
citation measure, we used newly developed patents in technology sub-section to measure
search scope.
Samsung Electronics has ‘Patent organization’ consisted of various departments. It has
the application group in each business departments and IP center coordinates and
supports these application groups as a whole. The main purpose of this organization is to
develop patents that are maneuverable against patent litigation. The application group
constantly monitors events such as patent litigation, licensing problem and control of
patent evaluation. Also, Samsung has sensing organization additionally with a help from
outside entity such as Thomson Reuters. The results of this sensing activity are instantly
shared with departments and integrate this information within each business department’s
sensing results. Various methods to measure the performance of patents are suggested
and took into consideration such as licensing fee. However, not all patents are licensed
and there is a huge time lag between the development of patents and gaining of licensing
fee. Therefore, measuring an instant performance of developed patents through licensing
fee is limited. Other than this measurement, one of the methods to measure patent
performance is to check whether the developed patents are used in litigation event or
utilized as a counterclaim.
Based on patent data from 2009 to 2013, 21870 patent data are collected based on
keyword search at KIPRIS. Number of patent applications of each year is as follows
(Year 2009 : 5,400; Year 2010 : 5,498; Year 2011 : 5,109; Year 2012 : 5,058; Year 2013 :
752). The variety of patent portfolio that Samsung Electronics possesses is within the
technology section B, C, F, G, and H. Thinklear program was used to analyze assembled
patent data and we organized them into yearly patent publication and technology sector
bases.
To measure search depth concentration, Herfindahl index was used to calculate patent
concentration rate. Search scope was measured by counting sub-technology class. The
result of this analysis is graphed below (Figure 4, Figure 5).

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0.7

0.69

0.68

0.67

0.66

0.65

0.64

0.63

0.62
2009 2010 2011 2012 2013

[Figure 4] Changes in patent search depth (2009-2013)

80

70

60

50

40

30

20

10

0
2009 2010 2011 2012 2013

[Figure 5] Changes in patent search scope (2009-2013)

According to figure 4, Herfindahl index goes up right after 2012, when Samsung
Electronics went through patent litigation with Apple Inc. The Herfindahl index is
constantly decreased from 2010 (0.674) to 2012 (0.648) and it rises drastically in year
2013 (0.688). This result indicates that Samsung Electronics’ patent portfolio become
more concentrated after patent litigation with Apple Inc., and shifts their patent search
strategy by increasing search depth. Moreover, analyzing patent development
concentration in depth, we observe the shifting of depth in technology class (Figure 6,

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Table 2). In terms of changes in patent search scope, we can observe that the search
scope decreases after 2012, corroborating the proposition 2.

70.00%

60.00%

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%
2009 2010 2011 2012 2013

[Figure 6] Patent concentration ratio in technology class

<Table 2> Technology specification related to change in concentration rate

Class Subclass
Increase D06 D06F (Control Panel of Laundry Washing Machine)
H04 H04L (Transmission of Digital Information),
H04N (Pictorial Communication),
H04W (Wireless Communication),
H04B (Transmission)
Decrease G01 G01R (Measuring Electric Variables),
G01N (Investigating or analyzing materials by determining their chemical
or physical properties)
G02 G02B (Optical Elements, Systems, or Apparatus),
G02F (Devices, the optical operation of which is modified by changing the
optical properties of the medium of the devices)
G03 G03B (Apparatus or arrangements for taking photographs or for projecting
or viewing them),
G03F (Photomechanical production of textured or patterned),
G03G (Electrography; Electrophotography; Magnetography)
H01 H01L (Semiconductor Devices)

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The depth of class H increased and class G decreased. Patents with increased depth are
related to “electric communication technique”, and more specifically the list of patent
name is as follows: H04L (Transmission of digital information), H04N (Pictorial
communication), H04W (Wireless communication), H04B (Transmission). These patents
are related with mobile sector where the patent litigation occurred. Therefore, this results
show that Samsung Electronics developed new patents around the problem-area
responding to the recognition of their performance below aspiration level indicated by
the litigation.
Results show how Samsung Electronics shift their patent strategy based on
performance feedback. Main proposition in this paper is that there is a linkage between
patent search process and the performance feedback. When firms fail to attain their social
aspiration level, which is indicated by the patent litigation in this research context, they
shift their patent search strategy by increasing the search depth and decreasing the search
scope. These results are consistent with the assumption that firms’ patent strategy is a
proactive behavior to solve problems that are recognized by the given performance
feedback. As previously discussed, the fact that firms shift their patent strategy based on
factors other than the technological environment is quite noteworthy.
The conclusion in this paper is that the apparent patent strategy changes come from
recognizing that the current patent strategy is problematic, and firms engage in
problemistic search in the way that we anticipated. Moreover, this paper provides a
longitudinal perspective of patent strategy which current papers failed to explain.

V. LIMITATIONS AND FUTURE RESEARCH

One caveat interpreting the results from Samsung Electronics case is that whether
patent litigation is qualified as the changes in social aspiration level based on the
performance feedback. There should be further studies measuring the social aspiration
level based on performance feedback model studies. This requires further data gathering
on historical and social aspiration level.
This study is an exploratory case study claiming that the changes in patent strategy
come from the recognition of their performance and reception of performance feedback.

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Seemingly unrelated two constructs - performance feedback and patent strategy-show

clear connection between them. We believe this fulfills the purpose of this exploratory
study, yet there need to be further studies to shed light on the relationship between firm’s
performance feedback and changes in patent strategy.
Future research would be an empirical research with more patent data and firms in
order to gain more generalizability. This paper mainly focused on the case of Samsung
Electronics in order to figure out the mechanism of shifting patent strategy in response to
performance feedback. Basic arguments were supported in this research, and with
additional data of various technology-intensive firms, it is expected to gain more robust
results on how firms change their patent strategy based on performance feedback. In
order to do that, more control variables and robust multiple regressions should be used to
investigate the relationship.
In order to measure the search depth, prior studies (e.g. Katila & Ahuja, 2002) used the
backward citation to indicate the depth of technology search. While search depth and
scope are widely used concepts to describe the search patterns in technologically-oriented
firms, aspiration-performance relationship we presented by adopting performance
feedback model may suggest new concepts in technology search pattern. When a firm
searches in order to increase performance reach the aspiration level, a firm needs to
engage in much more aggressive search strategies in order to reach the state. On the other
hand, when firm engage in slack search, they will tap into research area they never
engage before. Obviously this depends on the firms approach to innovation as well.
There are many interesting research subjects on this line of thinking and they benefit
from the basic idea we presented here. Firms engage in technology search based on their
performance feedback.
Our empirical grounding, Samsung Electronics is one of the major electronics
manufacturing companies in the world. However, it is only used as a showcase of our
argument relating performance feedback to technology search. Samsung is composed of
many different product lines that face different environmental changes. More granular
approach separating data for different product lines and how they are affected by the
changes in environment and performance feedback should be further studied as well.

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