Are business method innovations valuable to manufacturing firms, or should firms (particularly manufacturers) focus on product and manufacturing process innovations, as is traditionally the case? Leveraging on the decision of State Street vs. CLS Bank in 1998 whereby business method patents are now patentable subject matter, we compared returns to firms that applied or were granted business method innovation patents the US manufacturing sector from 1985-2014. We find evidence that both business method innovation and patenting produces positive returns to firms. With Anandhi Bharadwaj and Deepa Varadarajan