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Technological diversity, scientific excellence and the location of inventive activities abroad: the case of nanotechnology

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Abstract

Our contribution to the expanding literature on the globalization of research and innovation is to investigate the extent to which sector-specific developments in an emerging technology (such as increasing interdisciplinarity and complexity) affect inventive activities developed abroad. We look at how technological diversity and scientific excellence of host countries in the field of nanotechnology affect the development of inventive activities by US multinational companies (MNCs). We identify the most active US-based MNCs in nanotechnology-related patenting and examine location decisions of these companies and their international subsidiaries. Econometric results confirm our hypothesis that the technological breadth of host countries positively influences the expected number of inventions developed abroad by US MNCs. Science capabilities of countries also have a positive impact on the decision to invent abroad, while the influence of market specific factors is less clear. We interpret these results as suggesting that host country science capabilities are important to attract innovative activities by MNCs, but as the interdisciplinary and convergent nature of nanotechnology evolves, access to a broadly diversified knowledge base becomes important in increasing the relative attractiveness of host locations.

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Notes

  1. See Narula and Zanfei (2005) for a recent survey.

  2. A distinction should be made between the terms nanoscience and nanotechnology. Nanoscience refers to the search for fundamental new knowledge to understand structures, materials, and components at the scale of roughly 1–100 nanometer (nm). Nanotechnology is a broader concept that refers to the application of that knowledge to design and use. More formally, we can say that nanotechnology consists of the creation of systems, devices, structures and materials at the 1–100 nm scale with novel properties and functions because of their small size (PCAST 2005). Whereas the growth of codified knowledge in nanoscience can be captured by examination of scientific publication, for nanotechnology the intrinsic characteristics of patents (novelty, non-obviousness, and usefulness) make them appropriate for analyzing the development and application potential of this emerging technology.

  3. Instead of limiting the analysis to a particular country of origin of MNCs, another methodological solution could be to use dummy variables for each country of origin of MNCs. However, country comparability is problematic because there are country biases in the use of different patent offices (Schmoch 2007). As a result, our empirical model focuses on MNCs from a specific country.

  4. In total our sample size consists of 625 observations. These observations correspond to the total number of US assignees multiplied the total number of host countries with one patent invented totally or partially abroad and assigned to those corporations. We find that the US companies in our sample invent in a total of 25 host countries. Each observation is therefore unique for each company and each location.

  5. The use of patents as indicator of inventive activity has long been emphasized in the literature (see Griliches 1990, for a review). Despite the technical difficulties associated with patents and the fact that not all inventions are patentable, patent documents are rich information sources that can be used to study, among other topics, the geographic distribution of particular inventions. By limiting the analysis to a specific domain, we reduce potential differences that could emerge between fields and industries with different propensities to patent (Arundel and Kabla 1998).

  6. Patent scopes indexes are generally computed using the International Patent Classification (IPC) class in which a patent office assigns a patent (see, for example, Cassiman et al. 2006). As explained below, we use this classification at the three-digit level.

  7. These companies have 50 or more nanotechnology combined patents during the period under study. By industry category (using the Dow Jones Industry Classification Benchmark), the companies are: automobiles and parts: Ford Motor Company; chemicals: Dow Chemical Company, EI Du Pont de Nemours, Exxon Mobil Chemical, PPG Industries, Rohm & Haas; computer hardware: Hewlett-Packard, International Business Machines, Lucent Technologies, Seagate Technology; electronic office equipment: Xerox; general industrials: 3M, General Electric, Honeywell International; household goods: Procter & Gamble; leisure goods: Eastman Kodak; materials: Hyperion Catalysis (although not a large MNC, this is an internationally active company in the top 25 of all US nanotechnology patenting companies. We have thus included it in the analysis); personal goods: Kimberly-Clark; semiconductors: Advanced Micro Devices, Applied Materials, Intel, Micron Technology, Texas Instruments; telecommunications equipment: Corning Incorporated, Motorola.

  8. Initially we considered all patent offices included in the dataset. However, we found out that, except for USPTO, EPO and WIPO, other patent offices did not have complete information on the location of inventor. As a result, we only used awarded patents by USPTO and EPO and granted WIPO PCTs. As we are not comparing patent activities of companies from different countries, the use of different patent offices is appropriate and desirable.

  9. An extensive manual checking was undertaken to unify name variance of assignee firms and their subsidiaries. As noted by Griliches (1990), patent offices do not employ consistent company codes for each corporation.

  10. The geographic address of the inventor is a more desirable indicator of the site of the inventive process than the location of the assignee, because the assignee location may be biased towards head-office administrative locations (Jaffe et al. 2002).

  11. The main difficulty with the inventor location is that regional codes may correspond to country codes. For example, country/state code “CA” sometimes refers to Canada and other times to California, “IL” to Israel or Illinois, “IN” to India or Indiana, and “ID” to Indonesia or Idaho. To avoid misleading results regarding inventor cities and countries, inventor cities were assigned manually to correct countries/states.

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Acknowledgements

Sponsorship of this research was provided by the Center for Nanotechnology in Society (CNS-ASU funded by the National Science Foundation, Award No. 0531194). We owe special thanks to Chien-Chun Liu and Sophia Randhawa for their diligent research assistance. We also wish to thank Lynne Zucker, Michael Darby, and participants at the Nanobank NBER conference (May 2-3, 2008, Boston, MA) for helpful comments and suggestions. Comments by two anonymous referees are also greatly appreciated. The findings and observations contained in this paper are those of the authors and do not necessarily reflect the views of the National Science Foundation.

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  1. School of Public Policy and Enterprise Innovation Institute, Georgia Institute of Technology, Atlanta, GA, 30332-0345, USA

    Andrea Fernández-Ribas

  2. School of Public Policy, Georgia Institute of Technology, Atlanta, GA, 30332-0345, USA

    Philip Shapira

  3. Manchester Institute of Innovation Research, Manchester Business School, University of Manchester, Manchester, M13 9PL, UK

    Philip Shapira

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  1. Andrea Fernández-Ribas
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Correspondence to Andrea Fernández-Ribas.

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Fernández-Ribas, A., Shapira, P. Technological diversity, scientific excellence and the location of inventive activities abroad: the case of nanotechnology. J Technol Transf 34, 286–303 (2009). https://doi.org/10.1007/s10961-008-9090-2

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