Forman, C. and van Zeebroeck, N. (2012)-Siddharth Bhattacharya

The paper tries to investigate how the diffusion of the internet influences research collaboration within firms.Previous literature has suggested that research collaboration is hampered by the existence of significant coordination costs that increase with team size and that adoption of information technology such as internet lower coordination costs and thus increase returns of collaborative work.However although some works exist as to whether IT adoption helps academic collaboration no such work exists for industrial collaboration.This is the first work to do so.Motivating the hypothesis using prior models of Becker and Murphy(1992) the authors hypothesize that increase in IT investment(here internet adoption) will be  associated with an increase in the likelihood of geographically dispersed, multi inventor collaboration relative to collaboration within the same region/single inventor outputs.The data comes from multiple sources including:patenting data from USPTO,R&D data from Compuestat,regional controls from US census county business patterns.The analysis used is a difference in difference framework, comparing the incidence of a collaborative patent in firm-location pair prior to the treatment of basic Internet adoption to the incidence after the treatment .The model is a fixed effects linear probability model The model controls for observable changes in firm-pair conditions,fir-location employment etc which could affect collaboration volume.It also controls for location fixed effects.The diff-in-diff results show that there is a statistically significant increase in the incidence of collaborative patenting for cross-location pairs adopting Internet over the period, relative to non adopters.This however is not the case for same location teams or single inventors.To test the robustness of the findings the paper uses falsification tests and instruments to rule out endogeniety. The results remain robust and consistent.The research tries to answer a debate in previous literature of whether adoption of IT can lead to increase in collaboration due to reduction of coordination costs and managerially has implications for integration of geographically dispersed organizations/long run design of research organizations within firms.