How do intercultural proximity and social fragmentation promote international patent cooperation?

Joint innovation across countries plays a vital role in international networks of knowledge-intensive businesses. We study how the cultural backgrounds of collaborators influence success in international innovation. Intercultural proximity implies shared values and norms that can engender trust and cooperation in innovation. However, social fragmentation can induce conflict and mistrust, whereas joint innovation can progress through the tolerance and acceptance of different views. Our gravity model analysis of international patent cooperation data shows that social fragmentation complements intercultural proximity along the social identity dimensions of religion, ethnicity, and language to promote joint innovation. Intercultural proximity operates through trust, especially for countries with weak intellectual property rights laws, while social fragmentation operates through tolerance and acceptance, especially for countries with strong IPR laws. Economic strength, trade, and institutional differences are also important predictors of collaborative innovation. We confirm that geographical distance between countries lowers cooperation, but it cannot explain away the positive effects of intercultural proximity and social fragmentation. Plain English Summary: Co-innovation increases with intercultural proximity – and even more so when countries are socially fragmented. International joint innovation allows knowledge-intensive businesses to synergistically draw upon the ideas, expertise, and experience of innovators from their respective cultures (countries). However, such collaborations are often hampered by the uncertainty of partner exploitation and free-riding especially in the absence of formal institutions such as strong intellectual property rights (IPR) protection. In such cases, while intercultural proximity (e.g., along the dimensions of religion, ethnicity, and language) can promote cooperation through the informal institution of trust, social fragmentation can induce mistrust and in turn hamper collaboration. This is puzzling in light of evidence that fragmentation also promotes innovation. Thus, we empirically show that the positive effect of intercultural proximity operates through trust especially when IPR protection is weak. The positive effect of fragmentation on international patent cooperation operates through tolerance and acceptance especially when IPR protection is strong. This implies that nurturing tolerance and acceptance while strengthening IPR and developing the intellectual property ecosystem in fragmented societies, building intercultural trust, and increasing diversity in countries, alliances, or firms can promote co-patenting success. [ABSTRACT FROM AUTHOR]