Characterizing the “technological position” of firms, with application to quantifying technological opportunity and research spillovers

U.S. Patent data is used to characterize the technological position of manufacturing firms. Clusters of technologically related firms are identified and compared to standard industry groups. It is shown that the productivity of R&D varies systematically across these clusters, and this variation is related to the notion of “technological opportunity”. Finally, it is shown that the productivity of a firm's R&D is affected by the R&D of its technological neighbors. This is taken as evidence for “spillovers” of R&D among firms.