Combining Knowledge and Capabilities across Borders and Nationalities: Evidence from the inventions applied through PCT

This paper analyzes how co-inventions with foreign residents and/or foreign-born inventors contribute to the inventive performance, using the Patent Cooperation Treaty (PCT) applications. We find that combining inventors across borders and nationalities have become important in major industrialized countries, especially in the sectors where science is important for inventions. Both inventions with foreign-born inventors and those with foreign resident inventors have high science linkages, controlling for the sectors. We also find that the inventions based on such collaborations have high performance in terms of forward citations (but not in terms of the geographic scope of patent protection), relative to the inventions by the purely domestic team. These effects diminish but remain significant even if we control for firm fixed effects. However, these effects disappear once we control for the first inventor fixed effects, indicating the possibility that the matching between the high performing domestic inventors and the foreign resident and/or foreign-born inventors plays an important role.