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...shareholder value going forward. How are companies performing? Thirteen the top 20 companies awarded U.S. patents in 2004 are based outside the U.S. In the next 10 years, companies from China and India are likely to muscle onto this list.
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Of course, patent awards are only one measure of innovation. Even licensing revenue, which typically represents only 2 to 3 percent of corporate patent assets, is a fraction of the value from new products and services. Still, as economist Paul Romer of Stanford University has made clear, "while things such as land, machinery and capital are scarce, ideas and knowledge are abundant. They build on each other and can be reproduced cheaply or at no cost at all." One of the U.S.'s great strengths has traditionally been its ability to leverage such ideas. The country's recent growth rate of 4 percent--now projected to be closer to 3 percent, but still two to three times higher than the economies of Western Europe or Japan--with the highest improvements in productivity in three decades is a direct result.
But can U.S. companies sustain that level of growth--and their status as inventors and innovators? Results of a recent Conference Board survey suggest that challenge is a top-of-mind issue for business leaders. Two-thirds of the world's top chief executives reported planning to radically alter their companies over the next two years due to pressures from market and competitive forces. Central to their mission? Inculcating innovation into their business models to drive growth.
Business leaders know that their companies must differentiate themselves with new products and services. In his recent book, The World Is Flat: A Brief History of the Twenty-first Century, Thomas Friedman made the case that the global market is now an even playing field. Information and capital are fungible. Location does not matter, and knowledge and money go...
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