The role of domestic-firm knowledge in foreign R&D collaborations: Evidence from co-patenting in Indian firms

Nanditha Mathew, Lorenzo Napolitano & Ugo Rizzo


In this paper we analyze the impact of foreign R&D collaborations on the performance of domestic firms and how the relationship is augmented by the pre-existing capabilities of the domestic firms. Using data on Indian firms, we study patterns of co-invention of Indian firms with foreign partners. The results from a causal mediation analysis confirm the crucial role played by domestic firms' absorptive capacity in enhancing the benefits from a foreign collaboration. The evidence we present in this work highlights the microeconomics behind the process of technological capability accumulation and catching up in developing countries.

JEL Classification: L20, O30, D24, O12

Keywords: Co-patenting, Foreign Collaboration, Absorptive Capacity, Capability accumulation, Corporate Performance