Abstract
I study whether return migrants and their direct reports facilitate knowledge production and transfer across borders for multinationals. Using unique personnel and patenting data for 1315 inventors at an emerging market R&D center for a Fortune 50 technology firm, I exploit a natural experiment where the assignment of managers for newly hired college graduates is mandated by rigid HR rules and is uncorrelated to observable characteristics of the graduates. Given this assignment protocol, I find that local employees who report to return migrants file disproportionately more U.S. patents. I also find evidence that return migration facilitates knowledge transfer across borders.
Highlights
There is an established literature that studies the geography of innovation of the multinational enterprise (MNE)
I find some evidence that patents filed by local employees with return migrant managers exhibit higher self-backward citation rates compared to patents filed by local employees with local managers
The current study is one of the first empirical studies of skilled migration within the multinational enterprise and informs the literature on return migration and the literature on the geography of innovation of MNEs. It contributes to the broader literature on ‘proximities’ in economic geography by studying how employee transfers within the firm facilitate knowledge production/transfer at geographically distant R&D centers
Summary
There is an established literature that studies the geography of innovation of the multinational enterprise (MNE). Agrawal et al (2006) find that knowledge flows to an inventor’s prior location are approximately 50% greater than if they had never lived there, and the researchers conclude that social relationships, not just physical proximity, are important for determining flow patterns Given these results, for the MNE, knowledge is likely to be localized within the larger, more established knowledge production centers, and the firm might face constraints in producing/transferring knowledge across borders at the newly set up emerging market R&D centers. The final result is suggestive of the fact that return migrants may act as a ‘bridge’ for transferring knowledge from the MNE headquarters to the local employees who work for them.6 These results comprise a step forward in thinking about the expanding geography of innovation in the MNE and return migration.
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