Innovation in emerging markets

This dissertation comprises three studies in the field of innovation and global strategy. The common theme that links the three studies is 'innovation in emerging markets'. Chapter 1 is titled "Does Return Migration Facilitate Distributed R&D in Multinationals?" and explores whether the phenomenon of MNCs setting up R&D centers in emerging markets is related to the return migration of engineers and scientists from the U.S. to countries like China and India. I use hand collected employment, patenting and social relationship data from a Fortune 50 multinational R&D center in India to study whether having a returnee manager has a causal impact on knowledge creation by local direct reports. The measures of social relationship between each manager and direct report pair are constructed from data on membership of online communities. To account for endogenity and selection issues, I consider only fresh graduates for whom manager assignment is plausibly random. I then establish that having a returnee manager leads to higher patenting for fresh graduates.;Chapter 2 is titled "Inventor Mobility and Knowledge Creation: A Study Using Micro Data" and studies how short term inventor mobility across locations in a firm affects knowledge creation. Past studies of mobility and knowledge sharing are either based on large patent datasets or on surveys. In this chapter, I use micro data of travel records and employment records to establish how short term mobility affects knowledge creation. To account for endogenity and selection issues, I run a quasi experiment and consider inventors who got married or had children. Such inventors are hypothesized to have been treated by a random personal reason that constraints short term travel. I then use propensity scores based matching to identify inventors who are able to travel and who are similar to the treated individuals. I then compare subsequent patenting for each treated and control pair. I also test for two alternative hypotheses (resource sharing and knowledge sharing) for how mobility affects knowledge creation.;Chapter 3 is joint work with Tarin Khanna and is titled "Privatization of Innovation: Evidence from Indian national laboratories". Here, we explore the theme of reforming public R&D institutions in emerging markets. This chapter documents a dramatically successful reform effort in India where 42 state owned labs, over a fourteen year period (1993--2006) used licensing of intellectual property to reduce dependence on government budgetary support. From a base of almost no U.S. patents, the labs collectively emerged as one of the single largest patenting entities from all emerging markets and licensed several of these patents to multinationals. I also find that this reform follows incentive policy and leadership change at the labs. I exploit the exogeneity of the timing of leadership change (driven by rigid government rules) as the basis for identification. Unlike prior state owned entity (SOE) reform studies, mostly focused on China, I document that in the Indian context, collaboration between the state and private sector formed the engine of SOE reform.