Identifying new business areas using patent information: A DEA and text mining approach

From a resource-based point of view, firm's technological capabilities can be used as underlying sources for identifying new businesses. However, current methods are insufficient to systematically and clearly support firms in finding new business areas based on their technological strength. This research proposes a systematic approach to identify new business areas grounded on the relative technological strength of firms. Patent information is useful as a measure of firms' technological resources and data envelopment analysis (DEA) is beneficial to obtain the weighted value of patents according to their quality. With this weighted quality of patents, a firm can evaluate their relative technological strength at the industry and product level according to potential business areas. To compute technological strength by products, this research applies text mining method to patent documents, a method which a researcher discovers knowledge with unstructured data with. This paper shows the usefulness of the newly proposed framework with a case study. (C) 2010 Published by Elsevier Ltd.