Interlocking Directorships and Patenting Coordination

The aim of this paper is to investigate the role interlocking directorships play in the patenting activities of UK companies and provide further insights into the channels through which this relationship emerges. Our empirical analysis produces three main results: first, interlocking leads to a higher number of successful patent applications; second, interlocked firms are more likely to cite each other's patents, especially around the moment of interlocking; and, third, interlocked companies tend to increase the technological similarity of their patent portfolio in the immediate period following their first interlock. To rationalise these results, we develop a theoretical model that identifies interlocking directorships as a practice that prevents property right conflicts that often arise between firms that are technologically close to each other.