Corporate patents and knowledge sourcing from universities

This paper provides empirical evidence on the link between different external knowledge sourcing strategies from universities and firms' innovation output measured by the number of patent applications. Three strategies for acquiring external knowledge are distinguished: buying, cooperating and contracting out. The empirical model is based on the instrumental variable version of the ordered probit model. Geographical distance to local universities is employed as an instrument for the different knowledge sourcing strategies. The empirical results show that buying knowledge from universities is significantly positively related to the number of patent applications, while cooperating with universities and contracting out does not have an impact. This also holds for buying knowledge from domestic universities.