What drives the internationalisation of innovation? Evidence from European patent data

Abstract

This paper analyses the current internationalisation of innovation activities and identifies the main drivers for the countries of the European Union (EU). We employ patent applications at the European Patent Office covering the period 2000–2005. Our results show that the internationalisation of innovation is mainly due to an intensified co-operation between EU member states, as well as stronger ties between Europe and the USA. Innovative activity of EU enterprises is hardly globalised in the sense of being equally distributed around the world. Multivariate analysis reveals that cross-border patents between two countries increase with absolute market size of the host country, with rising levels of research and development in the home and host country and with a stronger protection of intellectual property rights in the host country. Distance between home and host country is negatively related to the number of cross-border patents. A common language between two countries and joint membership in the EU are also factors that considerably spur overseas innovation activity.

Keywords:

• internationalisation of innovation
• patents
• gravity model
• research and development

JEL Classification :

• O31
• O34
• F23

Acknowledgements

We benefited from the comments by Bernd Ebersberger, Martin Missong, Thomas Scherngell, the participants of the First European Conference on the Role and Dynamics of Corporate R&D [CONCORD-2007], DRUID Summer Conference 2008 and by the comments of two anonymous referees. We are grateful to the EPO for providing us the PATSTAT database. We also acknowledge the research assistance of Norbert Böck and Rafael Lata.

Notes

Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the UK.

Bulgaria, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia, Slovenia.

Cross-border patents should not be confused with the application of a patent at different patent offices.

See Griliches (1990), Archibugi (1992), and Smith (2005) for a general discussion of the limits of patents as indicators of technological change.

This measure corresponds to the share of patents with a foreign inventor and a domestic applicant in the country's total domestic applications (SHAI) indicator proposed by Guellec and van Pottelsberghe de la Potterie (2004).

Patent documents have been retrieved from EPO's database published on the internet, http://ops.espacenet.com/OpenPatentServices/webService. Data was retrieved on 27 June 2007.

Readers should note that the EU value only covers extra-EU collaboration, not cross-border patenting between member states of the EU.

The variable has been transformed by adding 1.

http://www.imf.org/external/ns/cs.aspx?id=28

http://www.uis.unesco.org

We only include EU15 member countries because the other member countries joined the EU only in 2004.

In 2000, the EU decided to create the European Research Area, which should lead to a further integration and a Single Market in Science and Technology.