Working Paper | HBS Working Paper Series | 2014

Return Migration and Geography of Innovation in MNEs: A Natural Experiment of On-the-Job Learning of Knowledge Production by Local Workers Reporting to Return Migrants

by Prithwiraj Choudhury

Abstract

I study whether return migrants and their direct reports facilitate knowledge production and transfer across borders for multinationals. Using unique personnel and patenting data for 1315 inventors at an emerging market R&D center for a Fortune 50 technology firm, I exploit a natural experiment where the assignment of managers for newly hired college graduates is mandated by rigid HR rules and is uncorrelated to observable characteristics of the graduates. Given this assignment protocol, I find that local employees who report to return migrants file disproportionately more U.S. patents. I also find evidence that return migration facilitates knowledge transfer across borders.

Keywords: Return migration; knowledge production; multinational enterprise; internal labor markets; Demographics; Multinational Firms and Management; Cross-Cultural and Cross-Border Issues; Innovation and Invention; Knowledge;