Fast Friends: The Impact of Short-Term Visits on Firms’ Invention Outcomes

We examine how employees’ short-term visits between research and development (R&D) centers across different countries can enhance a firm’s invention outcomes through enhancing intraorganizational knowledge flows and mutual trust between scientists. We utilize the staggered introduction of the U.S. visa waiver program (VWP) to 41 countries in 1988–2023, which substantially increased short-term visits to the United States. Following the introduction of the VWP, global pharmaceutical companies with R&D centers in VWP countries showed a significant increase in invention quantity and scope compared with those without R&D centers in VWP countries. Notably, we find that the benefits of short-term visits are greater when there is an intermediate knowledge distance between firms’ R&D centers in the United States and VWP countries. If R&D centers have similar knowledge bases, efficient knowledge flows can occur even without visits. For centers with very different knowledge bases, short-term visits do not provide enough time for sufficient knowledge flows. Benefits of short-term visits are also magnified when the cultural distance is greater between firms’ R&D centers. Our findings highlight that even short-term face-to-face interactions can enhance the sharing of tacit knowledge and subsequent invention, thereby offering important managerial and policy implications.