Calculating the technology base of a firm is a critical first step in studies of the technology strategies of a single entity and in making comparisons between the technology strategies of firms.  For example many studies of alliances and alliance portfolios require calculation of technology overlap between firm dyads. These studies typically use the patents of each partner dyad as the bases for the calculation.

Sampson (2007) uses the three-digit patent classifications determined for each patent by the US Technology and Patent office to determine technology overlap, calculating a weighted vector of the differences between the technology bases of a group of patents. This paper introduces a new measure of technology overlap based on the patent citations made in the patent applications. Each patent application lists the patented technologies that are being cited, much like citations in an academic paper. By examining patent citations, we can map the evolving technology base of a firm and compare that to itself and to other firms and groups of firms. This technique extends the approach used by Sampson (2007) and broadens the technology bases being compared.  Data on the patent citations is obtained from the National Bureau of Economic Research (NBER), a public database.

The paper examines the current techniques for calculating technology overlap and summarizes some of the current applications. Then the new approach of using patent citations is derived and examples of the calculation are presented. Finally application examples are developed for tracking the technology evolution of a single firm and for an alliance portfolio.