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International business travel: an engine of innovation?

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  • Nune Hovhannisyan

    ()

  • Wolfgang Keller

    ()

Abstract

While it is well known that managers prefer in-person meetings for negotiating deals and selling their products, face-to-face communication may be particularly important for the transfer of technology because technology is best explained and demonstrated in person. This paper studies the role of short-term cross-border labor movements for innovation by estimating the recent impact of U.S. business travel to foreign countries on their patenting rates. Business travel is shown to have a significant effect up and beyond technology transfer through international trade and foreign direct investment. On average, a 10 % increase in business travel leads to an increase in patenting by about 0.2 %, and inward business travel is about one fourth as potent for innovation as domestic R&D spending. We show that the technological knowledge of each business traveler matters by estimating a higher impact for travelers that originate in U.S. states with substantial innovation, such as California. This study provides initial evidence that international air travel may be an important channel through which cross-country income differences can be reduced. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Nune Hovhannisyan & Wolfgang Keller, 2015. "International business travel: an engine of innovation?," Journal of Economic Growth, Springer, vol. 20(1), pages 75-104, March.
  • Handle: RePEc:kap:jecgro:v:20:y:2015:i:1:p:75-104
    DOI: 10.1007/s10887-014-9107-7
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    Cited by:

    1. Ines Lindner & Holger Strulik, 2017. "Innovation and Inequality in a Small World," Tinbergen Institute Discussion Papers 17-057/II, Tinbergen Institute.
    2. Deltas, George & Karkalakos, Sotiris, 2013. "Similarity of R&D activities, physical proximity, and R&D spillovers," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 124-131.
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    5. Blonigen, Bruce A. & Cristea, Anca D., 2012. "Airports and Urban Growth: Evidence from a Quasi-Natural Policy Experiment," MPRA Paper 40304, University Library of Munich, Germany.
    6. Li, Yao Amber, 2014. "Borders and distance in knowledge spillovers: Dying over time or dying with age?—Evidence from patent citations," European Economic Review, Elsevier, vol. 71(C), pages 152-172.
    7. Sari Pekkala Kerr & William Kerr & Çağlar Özden & Christopher Parsons, 2016. "Global Talent Flows," Journal of Economic Perspectives, American Economic Association, vol. 30(4), pages 83-106, Fall.
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    More about this item

    Keywords

    International technology transfer; Face-to-face communication; Tacit knowledge; Cross-border labor movements ; Patenting; F20; O33; J61;

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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