E

We use the U.S. patent data merged with firm-level datasets to establish new facts about the role of mega firms in generating “novel patents”—innovations that introduce new combinations of technology components for the first time. While the share of mega firms in novel patents had been declining until about 2000, it has strongly rebounded since then. This coincided with a shift in the technological contents of novel patents, characterized by the transition from new combinations within Information and Communications Technology (ICT) components to new combinations integrating ICT and non-ICT components. Mega firms also generate a disproportionately large number of “hits” —new combinations that lead to the largest numbers of follow-on patents (patents that reuse the same combinations of technology components as the first novel patent). Furthermore, their novel patents tend to diffuse broadly—we find that mega firms’ most successful novel patents have more follow-on patents assigned not to themselves but to other firms compared to successful novel patents generated by non-mega firms. Overall, our findings suggest that mega firms play an increasingly important role in generating new technological trajectories in recent years, especially in combining ICT with non-ICT components, creating room for other entities to conduct followup innovations.