International Business Travel and Technology Sourcing

Access to new foreign technology is often central to countries’ development strategies. However, we know very little about the quantitative impact of technology sourcing. In this paper, we study the role of outward international business travel for technology sourcing and innovation by examining whether patenting in European regions is affected by the number of business travelers heading to the United States. Using European regional patent data for the years 1996 to 2010 from Eurostat and information on incoming business travelers from the U.S. Department of Commerce’s Survey of International Air Travelers, we find that controlling for a region’s R&D spending and size, innovation is increasing in the number of business travelers of the region to the United States. Technology sourcing through in-person business travel is not only statistically but economically significant, accounting, for example, for 20% of the higher patenting in Germany’s Greater Stuttgart area, compared to Portugal’s Algarve region.