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Cross-Border Property Rights and the Globalization of Innovation

Published online by Cambridge University Press:  01 July 2025

Bo Bian Open the ORCID record for Bo Bian [Opens in a new window] ,
Jean-Marie Meier Open the ORCID record for Jean-Marie Meier [Opens in a new window]  and
Ting Xu Open the ORCID record for Ting Xu [Opens in a new window]
Bo Bian
Affiliation:
University of British Columbia Sauder School of Business
Jean-Marie Meier
Affiliation:
University of Texas at Dallas Jindal School of Management
Ting Xu*
Affiliation:
https://ror.org/03dbr7087 University of Toronto Rotman School of Management National Bureau of Economic Research
*
tingxu.xu@rotman.utoronto.ca (corresponding author)
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Abstract

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We identify strong cross-border property rights as a driver for the globalization of innovation. Using 67 million patents from over 100 patent offices, we construct novel measures of the three stages of innovation diffusion: adoption, sourcing, and collaboration. Exploiting staggered bilateral investment treaties (BITs) as shocks to cross-border property rights, we show that signatory countries increase technology adoption and sourcing from each other; they also increase R&D collaborations. The results are particularly strong for countries with weak domestic institutions and technologies with high imitation risks. Increases in R&D-related foreign investments explain most of the results.

Information

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , First View , pp. 1 - 35
Creative Commons
Creative Common License - CCCreative Common License - BY
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0), which permits unrestricted re-use, distribution and reproduction, provided the original article is properly cited.
Copyright
© The Author(s), 2025. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Footnotes

A previous version of this paper was entitled “Cross-Border Institutions and the Globalization of Innovation.” We thank Jan Bena, Hans Christensen, Pengfei Han, Jarrad Harford (the editor), Christian Helmers, Johan Hombert, Jiekun Huang, Cree Jones, Brandon Julio, Erik Loualiche, Elena Loutskina, Song Ma, Filippo Mezzanotti, Ramana Nanda, Debarshi Nandy, Jiaping Qiu (the referee), Thomas Rauter, Delphine Samuels, David Schoenherr, Henri Servaes, Jan Starmans, Steven Xiao, one anonymous referee, and conference and seminar participants at the 2019 Junior Entrepreneurial Finance and Innovation Workshop, the 2021 China International Conference in Finance, the 2021 European Economics Association, the 2020 European Finance Association Annual Meetings, the 2020 Midwest Finance Association Annual Conference, the 2020 Northern Finance Association Annual Meetings, the 2020 Pacific Northwest Finance Conference, the 2021 SFS Cavalcade, the 2020 Northwestern/USPTO Conference on Innovation Economics, the 2023 Taiwan Symposium on Innovation Economics and Entrepreneurship, George Mason University, UBC, UT Dallas, and UVA Darden for their helpful comments and suggestions. We thank Jan Bena for sharing data and Keerthi Bisaramanempalli Reddiwandla for excellent research assistance.

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