1. ¹The Fox School of Business and Management, Temple University, Philadelphia, PA, USA
2. ²Widener University, Chester, PA, USA
3. ³School of Business, Rutgers University, Camden, NJ, USA
4. ⁴School of Business, State University of New York, New Paltz, NY, USA

Correspondence: Masaaki Kotabe, The Fox School of Business and Management, Temple University, 349 Speakman Hall, Philadelphia, PA 19122, USA. Tel: +1 215 204 7704; Fax: +1 215 204 8029; E-mail: mkotabe@temple.edu

Received 19 June 2003; Revised 13 July 2006; Accepted 2 August 2006.

Abstract

This study examines the determinants of international knowledge flow. From a resource-based perspective, it evaluates the impact of cross-national knowledge transfer on firm innovative performance. Based on 56,027 US patents owned by 53 selected firms in the US-based pharmaceutical industry, the results suggest that innovative performance is a curvilinear function of the international knowledge content used by a firm to innovate. As hypothesized, it was found that at (1) low and moderate levels of international knowledge content, a firm's strategy to transfer international knowledge improves its innovative performance, and at (2) higher levels of international knowledge content, there are diminishing marginal returns to transferring knowledge from overseas.