Article | Management Science | July 2013

Ethnic Innovation and U.S. Multinational Firm Activity

by C. Fritz Foley and William R. Kerr

Abstract

This paper studies the impact that immigrant innovators have on the global activities of U.S. firms by analyzing detailed data on patent applications and on the operations of the foreign affiliates of U.S. multinational firms. The results indicate that increases in the share of a firm's innovation performed by inventors of a particular ethnicity are associated with increases in the share of that firm's affiliate activity in their native countries. Ethnic innovators also appear to facilitate the disintegration of innovative activity across borders and to allow U.S. multinationals to form new affiliates abroad without the support of local joint venture partners. Thus, this paper points out that immigration can enhance the competitiveness of multinational firms.

Keywords: foreign direct investment; Technology Transfer; patents; innovation; Research and Development; Ethnic Networks; diasporas; Patents; Diasporas; Ethnicity Characteristics; Multinational Firms and Management; Competitive Advantage; Research and Development; Foreign Direct Investment; Innovation and Invention; United States;

Citation:

Foley, C. Fritz, and William R. Kerr. "Ethnic Innovation and U.S. Multinational Firm Activity." Management Science 59, no. 7 (July 2013): 1529–1544.