Innovation diffusion enabler or barrier: An investigation of international patenting based on temporal exponential random graph models

The past two decades have witnessed a rapid growth of foreign patenting, accounting for an average of 15.4% of all patents filed under the Patent Cooperation Treaty (PCT) in the critical technology domains. This study explores two hypotheses in explaining this worldwide phenomenon in the networked relationships, that is, market covering and competitive threat. International patenting networks (IPN) over the period 1999 to 2018 are established using the dataset of cross-border ownership patents from 89 countries released from OECD's Directorate for Science, Technology and Industry. The temporal exponential random graph models (TERGMs) are formulated to test the two hypotheses, proxied by import network and competitive import network, conditioning on country-specific, network self-organizing, and exogenous network characteristics. Results of this study lend support to market covering hypothesis, that is, higher exports lead to greater propensity to patent abroad. This finding identifies international patenting as an enabler of innovation diffusion rather than a barrier. Furthermore, results of controlling variables indicate technological distance exerts an inhibiting effect, whereas charges for intellectual property rights has a promoting influence on IPN evolution, thus shedding light on the catching-up of developed economies. © 2020 Elsevier Ltd