This document discusses how changing fields affects an inventor's ability to create novel and valuable inventions. It presents arguments that field-specific expertise benefits invention but exposure to new fields also stimulates novelty. The authors hypothesize that changing fields reduces invention value due to lack of expertise, but increases novelty from fresh perspectives. Collaboration and relying on published science in the new field may mitigate negative effects on value and strengthen positive effects on novelty. Regression analysis of inventor patents before and after a natural experiment in Michigan's non-compete laws suggests changing fields decreases invention value but increases novelty, supporting the hypotheses.

1. Paradise of Novelty – or Loss of Human Capital?
Changing Fields and Inventive Output
Sam Arts
Faculty of Business and Economics
KU Leuven
sam.arts@kuleuven.be
Lee Fleming
Fung Institute for Engineering Leadership
UC Berkeley
lfleming@berkeley.edu
OECD Blue Sky Conference 2016

2. RQ: What happens when an inventor changes
fields?
“The man who employs either his labor or his stock in a
grater variety of ways than his situation renders
necessary… may hurt himself, and he generally does so…
Jack of all trades will never be rich, says the proverb.”
Adam Smith, Book IV, Chapter V, p. 563.
“Almost always the men who achieve these fundamental inventions of a
new paradigm have been either very young or very new to the field whose
paradigm they change.”
Thomas Kuhn, The Structure of Scientific Revolutions, p. 89-90.

3. Really good arguments for the value of field-
specific expertise … and not changing fields
• Benefits of specialization in labor
– Smith 1776
• Knowledge accumulates as technology advances
– Mokyr 1990, Jones 2009, not just economists: Gilfillan 1935, Basalla 1988
• Deep immersion in a field crucial for invention
– Field-specific knowledge and skills foundation for creative thinking process (Gruber 1981,
Gardner 1993, Csikszentmihalyi 1996, Simon 1996)
– ”… knowledge, expertise, technical skills, intelligence, and talent in the particular domain where
the problem-solver is working" (Amabile 1983, 2013)

4. … and really good arguments for the value of
exposure to diversity … and changing fields
•Evolutionary analogies to variation stage, more material
for recombinant novelty
– Darwin 1872, Poincare’ 1913, Campbell 1960, Simonton 1999
•Received wisdom for value of cross-disciplinary search
•Field-specific expertise can block novel insights
– Inflexibility of the information processing system, negative transfer, Einstellung, or mental block
(e.g., Luchins and Luchins 1959, French and Sternberg 1989)
– Changing fields, freed from conventions, approach problems with a helpful level of naïveté
(Merton 1973: 518)

5. •Invention is novel and valuable (Amabile 2013)
–e.g. patentability
•Normative and popular connotation that all inventions are
intrinsically novel and valuable
•Empirical reality: most new ideas are incremental, fail or
have little value (Scherer and Harhoff 2000)
•Two separate dimensions
The answer to this question is intuitive – if you
separate novelty from value

6. •Hypothesis 1: Inventors who do not change fields create
more valuable inventions.
– Novices lack field-specific knowledge and expertise
– Exploring new field is risky, difficult (learning takes time), failure
•Hypothesis 2: Inventors who do change fields create more
novel inventions.
– Knowledge diversity and combinatorial opportunities
– Not blocked by dominant paradigms
=> Key challenge: how to ameliorate this trade-off?
Trade-off between exploitation and exploration

7. •Eases the “burden of knowledge”,
learning a new field less difficult and
inefficient (Jones 2009, Singh and Fleming 2010)
•Stimulate creativity and new insights (Wuchty et al. 2007).
• Hypothesis 3a: The negative effect of changing fields on the value of
invention is weaker for inventors who collaborate.
• Hypothesis 3b: The positive effect of changing fields on the novelty of
invention is stronger for inventors who collaborate.
Collaboration in the new field

8. •Facilitates prediction and decreases the need for empirical
iteration, experimentation, and learning (Roach and Cohen 2013,
Fleming and Sorenson 2004).
•Exposure also stimulates novel insights.
• Hypothesis 4a: The negative effect of changing fields on the value of
invention is weaker for inventors who rely on published science.
• Hypothesis 4b: The positive effect of changing fields
on the novelty of invention is stronger for inventors who
rely on published science.
Relying on published science in the new field

9. 9
Data and analysis
•Rely on repeated observations (patents) of the same inventor
– To observe field changes
– Study effect on novelty and value of the invention (patent)
•Large inventor-firm fixed-effects panel
– All inventors on US patents with at least one prior patent, two patents
assigned to the same firm, 1975-2002
– 2,705,431 patents; 396,336 inventors; 46,880 unique firms
– Control for unobserved heterogeneity across inventors and firms
•Natural experiment in non-compete labor law
– Michigan Antitrust Reform Act (1985)
– Exogenous variation in changing fields among inventors moving between
firms
– CEM matching (Iacus et al. 2009, 2011)
– 6,264 patents, 4,686 inventors

10. • Value
– Number of times renewal/maintenance fees are paid
• 0,1,2,3 times; 4, 8, and 12 years after grant
– Number of forward citations received within 10 years
• Novelty
– Number of new to the patent corpus words found in the title,
abstract and claims
• all patents before 1980 establish benchmark, numbers and hyphens
removed
– Number of backward technical prior art citations (Ahuja and
Lampert 2001)
Dependent variables (patent level)

11. 11
Most reused novel words by five-year periods and
colored by NBER technology category

12. Independent variable
• Changing fields
– Rely on repeated patents of the same inventor
– Binary: no overlap between three digit classes of all prior patents and the
classes of the current patent.
•Collaboration
– Binary: more than one inventor on the patent.
•Science
– Binary: patent cites non-patent literature (mostly scientific publications, see Fleming
and Sorenson 2004)
•Interaction between changing fields and collaboration/
science

13. Control variables
•Number of prior patents (ln)
•Technical specialization
•Number of prior collaborations (ln)
•Move
•Prior move
•Days since last patent (ln)
•Days since first patent (ln)
•Number of prior patents firm (ln)
•Number of classes (ln)
•Number of subclasses (ln)

15. Conclusion
• Changing fields leads to less valuable inventions
– Importance of field-specific knowledge and expertise
– Accretion of specialized human capital
• Changing fields leads to more novel inventions
– Importance of exposure to diversity and fresh perspectives
– Prior field-specific expertise constrains search and blocks novel ideas
•How to manage this ultimate trade off? How can
inventors optimally explore?
– Collaboration in new field reduces negative impact on value
– Reliance on published science strengthens positive impact on novelty

16. Thanks!
Questions?

17. A natural experiment to strengthen causal
inference
• Non compete contract prevents the employee from working within
the same field of expertise (and exploiting their knowledge) after
moving to a new firm
• Used by firms to protect knowledge and expertise
• Prohibited in some US states
• e.g. Cal and Silicon Valley
• Michigan Antitrust reform Act (1985)
• Unintended change in non-compete labor law
• Non competes became legally enforceable
• Mobile inventors moving to a new firm are exogenously pushed to
change fields because of the threat of litigation (Marx 2011)

18. Michigan experiment
18

19. Data and analysis
•First patent of an inventor after they moved between
two firms within the same state.
•Inventors with at least one prior patent before MARA
(1985) in a non-enforcing state, and to patents filed
between 1975 and 1995 (10 years before and after
MARA
•Exploit DD: only mobile inventors in Michigan after
1985 are affect by MARA

21. MARA as an instrument for changing fields

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