Reverse Technology Transfer: A Patent Citation Analysis of the European Chemical and Pharmaceutical Sectors

One consequence of the internationalisation of R&D, particularly in high-tech sectors such as chemicals and pharmaceuticals, may be the transfer of foreign technology from the multinational to other firms in its home country. This phenomenon, which may be termed inter-firm reverse technology transfer, has not yet been directly analysed by either the international management literature or the literature on foreign direct investment. But its implications for policy – particularly in Europe – may be significant. Drawing on the evolutionary theory of the multinational, and on the concept of embeddedness, this paper is a first attempt at addressing this issue. We test the hypothesis of inter-firm reverse technology transfer by performing a patent citation analysis on a database of USPTO patents applied for by 24 chemical and pharmaceutical companies over the period 1980-99. Our findings suggest that multinationals act as a channel for the transmission of knowledge developed abroad to other home country firms. These results point to an alternative understanding of foreign direct R&D investment and its implications for both the home country’s technological activity, and its competitive performance in generalMultinational firms; patent citation; embeddedness; international technology transfer

Reverse Technology Transfer: A Patent Citation Analysis of the European Chemical and Pharmaceutical sectors

One consequence of the internationalisation of R&D, particularly in high-tech sectors such as chemicals and pharmaceuticals, may be the transfer of foreign technology from the multinational to other firms in its home country. This phenomenon, which may be termed inter-firm reverse technology transfer, has not yet been directly analysed by either the international management literature or the literature on foreign direct investment. But its implications for policy – particularly in Europe – may be significant. Drawing on the evolutionary theory of the multinational, and on the concept of embeddedness, this paper is a first attempt at addressing this issue. We test the hypothesis of inter-firm reverse technology transfer by performing a patent citation analysis on a database of USPTO patents applied for by 29 chemical and pharmaceutical companies over the period 1980-99. Our findings suggest that multinationals, especially in the pharmaceutical sector, act as a channel for the transmission of knowledge developed abroad to other home country firms. These results point to an alternative understanding of foreign direct R&D investment and its implications for both the home country’s technological activity, and its competitive performance in general.economics of technology ;

Using multi-hub structures for international R&D: Organizational inertia and the challenges of implementation

Over the last decade or so, multinational enterprises (MNEs) have shifted from centralised hub structures to multi-hub structures. While these new structures provide greater potential for cross-fertilization of technologies and access to locationspecific competences, promoting effective knowledge transfer within an MNE – especially in their R&D activities - presents significant managerial challenges. Using evidence collected on the R&D activities of MNEs in the pharmaceutical sector, this paper analyses the challenges associated with complexities of promoting and integrating knowledge flows in the face of inter-unit geographical, organizational and technological distance. MNEs are faced with organizational inertia that hinders efficient lateral communication and inter-unit knowledge transfer, and the evidence suggests that while socialization mechanisms help overcoming some of these bottlenecks, there remain a number of obstacles in optimising knowledge flows in physically and technologically dispersed R&D facilities.economics of technology ;

Does it matter where patent citations come from? Inventor versus examiner citations in European patents

This paper investigates whether the distinction between patent citations added by the inventor or the examiner is relevant for the issue of geographical concentration of knowledge flows (as embodied in citations). The distinction between inventor and examiner citations enables us to work with a more refined citation indicator of knowledge flows. We use information in the search reports of patent examiners at the European Patent Office to construct our dataset of regional patenting in Europe, and apply various econometric models to investigate our research question. The findings point to a significant localization effect of inventor citations, after controlling for various other factors, and hence suggest that knowledge flows are indeed geographically concentrated. This holds true also for a sub-sample of patents owned by 169 large multinational enterprises (MNEs). The results for the sample of MNEs suggest that multinational firms seek out specific regional knowledge specializations (and hence at least partly reinforce geographical concentration), but are also able to transfer knowledge "easier" over larger distances.research and development ;

A novel approach to national technological accumulation and absorptive capacity: Aggregating Cohen and Levinthal

The paper develops a more precise specification and understanding of the process of national-levelknowledge accumulation and absorptive capabilities by applying the reasoning and evidence from the firm-levelanalysis pioneered by Cohen and Levinthal (1989, 1990). In doing so, we acknowledge that significant cross-bordereffects due to the role of both inward and outward FDI exist and that assimilation of foreign knowledge is not onlyconfined to catching-up economies but is also carried out by countries at the frontier-sharing phase. We postulate anon-linear relationship between national absorptive capacity and the technological gap, due to the effects of thecumulative nature of the learning process and the increase complexity of external knowledge as the country approachesthe technological frontier. We argue that national absorptive capacity and the accumulation of knowledge stock aresimultaneously determined. This implies that different phases of technological development require different strategies.During the catching-up phase, knowledge accumulation occurs predominately through the absorption of trade and/orinward FDI-related R&D spillovers. At the pre-frontier-sharing phase onwards, increases in the knowledge base occurlargely through independent knowledge creation and actively accessing foreign-located technological spillovers, interalia through outward FDI-related R&D, joint ventures and strategic alliances.economics of technology ;

Using Multi-hub Structures for international R&D Organizational Inertia and the Challenges of Implementation

Over the last decade or so, multinational enterprises (MNEs) have shifted from centralised hub structures to multi-hub structures. While these new structures provide greater potential for crossfertilization of technologies and access to location-specific competences, promoting effective knowledge transfer within an MNE – especially in their R&D activities - presents significant managerial challenges. Using evidence collected on the R&D activities of MNEs in the pharmaceutical sector, this paper analyses the challenges associated with complexities of promoting and integrating knowledge flows in the face of inter-unit geographical, organizational and technological distance. MNEs are faced with organizational inertia that hinders efficient lateral communication and inter-unit knowledge transfer, and the evidence suggests that while socialization mechanisms help overcoming some of these bottlenecks, there remain a number of obstacles in optimising knowledge flows in physically and technologically dispersed R&D facilitiesMultinational enterprises, R&D, Geographical distance

The relative importance of home and host innovation systems in the internationalisation of MNE R&D: a patent citation analysis

This paper examines the phenomenon of home base augmenting (HBA) R&D and home base exploiting (HBE) R&D. It has three novelties. First, we argue that any given R&D facility’s capacity to exploit and/or augment technological competences is a function not just of its own resources, but the efficiency with which it can utilise complementary resources associated with the relevant local innovation system. Just as HBA activities require proximity to the economic units (and thus the innovation system) from which they seek to learn, HBE activities draw from the parent’s technological resources as well as from the other assets of home location’s innovation system. Furthermore, we argue that most firms tend to undertake both HBE and HBA activities simultaneously. Second, we use patent citation data from the European Patent Office to quantify the relative HBA vs. HBE character of foreign-located R&D. Third, we do so for European MNEs located in the US, as well as US MNEs located in Europe. Our results indicate that both EU (US) affiliates in the US (EU) rely extensively on home region knowledge sources, although they appear to exploit the host country knowledge base as well. The HBA component of US R&D in Europe in chemicals, electronics and petroleum refining is stronger than their European counterparts, as is the case for European R&D activities in the US in engineering.economics of technology ;

The Knowledge Bases of the World's Largest Pharmaceuticals Groups: what do Patent Citations to Non-Patent Literature Reveal?

This paper examines the knowledge bases of the world's largest pharmaceuticals groups by sales. It puts forward the concepts of knowledge breadth and depth as the relevant dimensions along which knowledge bases can be mapped. Breadth is studied by analysing the evolution of specialisation by scientific field over time. It hints at the widening range of bodies of scientific and technological knowledge relevant to firms' innovative activities. Depth (or integration) is studied by analysing the evolution of specialisation across different typologies of research. It hints at the complex, non-linear interdependencies that link the scientific and technological domains. We develop the analyses on the strength of an original database of 33,127 EPO patents, and of 41,931 'non patent document' citations (of which 19,494 were identified as scientific articles included in the ISI databases). The groups studied seem to have incrementally increased the breadth of their knowledge bases, moving toward the fields proper of the new bio-pharmaceutical research trajectory. At the same time, some of the groups studied exhibit remarkable depth in knowledge specialisation in particular fields such as biotechnology, biochemical research and neurosciences. Finally, this paper also provides a first methodological test of possible problems deriving from the use of 'unidentified' patent citations (i.e. added by the examiners together with those proposed by the inventor). We compare a random sample of these citations with a sample of citations explicitly added by the original inventor, and compare the results in terms of scientific specialisations.Knowledge Breadth, Depth, Integration, Patent Citations, Scientific Publications, Pharmaceuticals