What determines how long an innovative spell will last?

This paper is set out to examine the temporal pattern of innovative activities: what might have affected a firm’s patenting from one period to the next. Based upon data on ‘information technology’ (IT) manufacturing firms in Taiwan covering the years 1990–2001, we develop a survival model to analyze the underlying drivers of patenting duration. Our results indicate that the level of the patent stock at the onset of the patent spell, defined as the number of successive years during which a firm produced at least one patent per year, has a non-linear effect on spell duration. Other factors, such as industrial growth, firm size and firm profitability, have a positive effect on patenting duration, while firm age and spell sequence affect negatively to spell duration. We conclude that state dependence is demonstrated by innovative behavior, yet the advantages gained from such creative accumulation can easily be dissipated, thereby illustrating the transient nature of dynamic capabilities.