From Wires to Partners: How the Internet Has Fostered R&D Collaborations Within Firms

How did the diffusion of the Internet influence research collaborations within firms? We examine the relationship between business use of basic Internet technology and the size and geographic composition of industrial research teams between 1992 and 1998. We find robust empirical evidence that basic Internet adoption is associated with an increased likelihood of collaborative patents from geographically dispersed teams. On the contrary, we find no evidence of such a link between Internet adoption and within-location collaborative patents, nor do we find any evidence of a relationship between basic Internet and single-inventor patents. We interpret these results as evidence that adoption of basic Internet significantly reduced the coordination costs of research teams, but find little evidence that a drop in the costs of shared resource access significantly improved research productivity. <i>This paper was accepted by Lee Fleming, entrepreneurship and innovation.</i>