Leveraging global recombinant capabilities for green technologies: the role of ethnic diversity in MNEs’ dynamics

Abstract

The growing environmental pressure and the parallel policy push on eco-innovations are making the generation of green technologies more and more profitable, given the expansion of existing markets and the creation of new ones. MNEs may show a competitive advantage in this context because of their global knowledge sourcing strategies that increase heterogeneity and variety in firms’ innovation processes. We accordingly argue that the inventors’ teams involving higher ethnic diversity are more likely to successfully generate green inventions due to their idiosyncratic experiences and diversified knowledge bases. We rely on USPTO data from an ethnic patenting database covering US-based MNEs from 1980–2009. We find that R&D teams featured by higher levels of ethnic diversity among the US-based inventors correlate with a higher probability of green patenting, but the relationship follows a non-linear pattern. Also, ethnic diversity is found to moderate the effect of recombinant capabilities on the generation of new green technologies. Our results bring implications for the strategic management of inventors’ teams by multinationals willing to run the green patent race and policymakers facing the climate change challenges.