Knowledge sourcing by foreign multinationals: Patent citation analysis in the US semiconductor industry

Do multinationals go abroad to acquire technological knowledge? Do they also contribute knowledge locally? We investigate the learning and contribution patterns of multinational firms in the U.S. semiconductor industry through the analysis of citations to their patents and through field interviews. We find that the knowledge used in innovation by foreign subsidiaries in U.S. regions is predominantly local (at the regional and country level). In fact, foreign firms use regional knowledge significantly more than similar domestic firms. In the case of European and Korean firms, foreign investment is directed towards offsetting home country technological weaknesses. The study finds that foreign firms also contribute to local technological progress-a significant proportion of the citations to their parents are local. Local learning without contributing may not be possible.