The latest version had published in TF&SC. Please cite this article as: H.-C. Huang, et al.

, Contagion effects of national innovative capacity:

Comparing structural equivalence and cohesion models, Technol. Forecast. Soc. Change (2010), doi:10.1016/j.techfore.2010.07.017
PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET

National Innovative Capacity in the International Technology Diffusion:

The Perspective of Network Contagion Effects
Hung-Chun Huang, Hsin-Yu Shih
National Chi Nan University, International Business Studies Dept., Taiwan

Abstract--Effective promoting national innovative capacity states trade and investment policies are influenced by trading
performance tends to be a critical policy for a country. This partners and competitors. A focal country will be subject to
study examines network contagion effects on international policy influences from its cohesive partners and structurally
diffusion of embodied and disembodied technology by two equivalent competitors. Based on the previous literature on
different social network models: cohesion models, which are
based on diffusion by direct communication, and structural
the influence of national innovative capacity, simply focusing
equivalence models, which are based on diffusion by network on the internal environment in a nation cannot entirely affect
position similarity. This study then utilizes the data of 42 the performance of national innovative capacity.
countries from 1997 to 2002 to empirically examine their This study examines social contagion effects, using
relational influences. The analytical results show international cohesion and structural equivalence models to explore the
technology diffusion influences the performance of national critical influence mechanisms of a national innovative
innovative capacity through contagion effects; however, the capacity. Amplifying the influence of national innovative
mimetic behavior is predicted better by network position than capacity requires not solely reinforcing the internal elements
by interactions with others. This result provides a broader of NIC but concentrating on the interaction with cohesive
consideration for science and technology policy.
countries or the imitation of structurally equivalent
competitors. Hence, the research objectives in this study are
I. INTRODUCTION
the following: Firstly, to evaluate the contagion effects on the
performance of national innovative capacity through
Due to fierce global competition, developing or developed
international diffusion of embodied technology and
countries have experienced the pressure of competition;
disembodied technology. Secondly, provide authority
especially for developing countries, they must meet the
utilizing extensive consideration on the influence upon
intractable challenges of technological advancement and
national innovative capacity to make a more perfectible
innovation from advanced countries. Technological
policy toward magnifying national competitiveness.
innovation is an indispensable means for promoting national
The rest of this study is organized as follows. Section II
competitiveness, no matter what level the country in question
examines literature focusing on the concept of national
currently occupies. Freeman et al.[1] theorize that national
innovative capacity, international technology diffusion
innovative capacity reflects more fundamental determinants
containing embodied and disembodied form and social
of the innovation process, proposing the influence of national
contagion effects, the cohesion model and structural
innovative capacity, offering countries recipes to affect
equivalence model. Section III then proposes the research
national innovative capacity. Technology is highly related to
hypotheses in relation to the testing and comparison of the
cultural and social settings of organizations [2]. However,
different contagion effects. Next, Section IV introduces the
Furman & Hayes [3] suggest that a well-functioning
measurement and models of social network analysis used to
innovation infrastructure is essential but not sufficient to
investigate the mechanisms of international technology
support the environment required to achieve everlasting
diffusion. Section V empirically tests the research hypotheses
innovation at the world’s technological frontier. In addition,
applying the sample of international technology diffusion on
related R&D management literatures stress the necessity for
global structure, and discusses the theoretical and managerial
interaction between developers and users of new technology
implications. Finally, conclusion and remarks are shown in
to enhance the development and execution processes [4-7].
section VI.
Therefore, the interaction among organizations brings forth
the progress of technological innovation. So does the
II. LITERATURE REVIEW
communication among countries.
Countries make these interactions affect each other in the
This section introduces national innovative capacity and
performance of economics, politics and culture, due to the
defines the international diffusion of technology involving
development of information technology. So, while a country
two types of diffusion, embodied and disembodied. The final
makes a decision or a direction of its policy on national
sub-section focuses on social contagion effects, exploring
technology development, it not only depends on its own
previous works discussing social network analysis.
situation, but may seek other countries’ advice or experience.
Theories of interdependence support mutual interdependence
A. National innovative capacity
between nations from close interactions, resulting in
National innovative capacity has been defined as the
reciprocity and complicity in policies [8]. Koka et al. [9]
institutional potential of a country to sustain innovation.

2699
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
Numerous scholars (e.g. [10, 11] ) have clearly defined this
concept and a suitable measure based on patenting rates.
Therefore, patents are acknowledged to provide a reliable and
unbiased indication of national innovation effort [12, 13].
One of the clearest indicators of innovation performance is
the rate of take-up of patents issued by the US Patent and
Trademarks Office (USPTO). Innovative capacity primarily
depends upon the technological level and sophistication of an
economy and the investments and policy choices of both
institutions and the private sector [11]. Consequently,
measuring national innovation output includes patents,
publications in scientific journals, copyrights, trademarks, etc.
All of these are products of innovation efforts, and copyrights
and trademarks even represent direct indicators of innovative
output[11]. However, this work, based on previous studies
(e.g.[10, 11]) chooses patent output as innovative output.
Additionally, Furman & Hayes [3] note that PATENTS
correlated positively with the true level of new-to-the-world
innovative output in their model, and that it appears to be the
best available indicator for comparing national innovation
output across countries over time. Trajtenberg [13] even
considers international patents “the only observable
manifestation of inventive activity with a well-grounded
claim for universality.” Therefore, international patents is the
most useful available measure for comparing innovation
output across countries and over time [3]. Consequently, this
study adopts USPTO patenting activities by sample countries
to measure national innovative capacity.
B. International Technology Diffusion
Diffusion is a process that involves spreading certain
innovation information by participants in a social system
through particular channels [14]. Diffusion is an exceptional
form of communication, and involves participants providing
and sharing information. Diffusion thus can refer to the
dissemination of knowledge, technology transfer or
deployment [2]. Technology diffusion was influenced by
innovations and technical updates over time. Based on
technology diffusion, Vernon[15] argues international product
life cycle theory; however, this theory focus upon production
sites shifting process and trade flow rather than the influence
of technology diffusion on innovation capacity. Countries
acquire innovation technology in two main ways, enforcing
domestic technology development and innovation capacity,
and obtaining foreign advanced technologies via international
technology diffusion. Griliches [16-18] divides international
technology diffusion into rent spillover and pure knowledge
spillover.
1. Embodied Technology Diffusion
The type of rent spillover, referring to the price of new
products for which innovation technology knowledge exists,
cannot fully reflect the high quality of knowledge innovation
in the process of commercialization. A country purchasing
intermediate products at certain price that does not mirror
their actual value can enjoy the benefits of R&D conducted
2700
by other countries; that is, the purchasing country employs
passive technology spillover or embodied technology
diffusion [19] to supply their innovation capacity. The
activities of the international diffusion of embodied
technology are observable based on trade flows and foreign
direct investment [17, 20]. Moreover, most related studies
(for example [21-25]) demonstrate a significant positive
relationship between total factor productivity and
international trade for a given nation as evidence of
international research spillover.
New growth theory argues that the marginal profit from
capital investment is not certain to decrease over time, and
accumulated capital can sustain long-term GDP per capita;
this theory also deems knowledge to be the public goods in
the capital accumulation and the creation of an increasing rate
of return via the spread of information. A nation benefits
from spillover through trade partner investment knowledge.
Consequently, knowledge capital and R&D activities benefit
national economic growth. Smith & White [26] demonstrate a
positive relationship between trade and national
competitiveness using exploring the dynamic configuration of
global economics through trade flows. Coe et al. [27] find it
better to measure trade-related spillover using trade in capital
goods rather than total trade. Hence, this work adopts imports
of machinery and equipment for diffusing information on
embodied technology to investigation. Countries exchanging
goods through international trade generate rent spillover.
2. Disembodied Technology Diffusion
The type of pure knowledge spillover, as well as the
inherent knowledge simulated and adopted by others, emerge
primarily by externalities in the form of flows of research and
development (R&D) personnel, mobility of knowledge,
dissemination via cooperation, international technology
learning or the direct purchase of foreign technology
knowledge. Such knowledge spillover makes leaders of
enterprises or nations reluctant to accept unavoidable spread
and diffusion via numerous noncommercial channels. Thus
this kind of diffusion can be called active technology
spillover or the disembodied form of international technology
diffusion, measured in the form of formulas, blueprints,
drawings, patent citations, and so on [28]. The advantages of
innovation activities are reflected in the process of
commercialization[19]; restated, an effective method of
measuring national competitiveness in disembodied form is
through patent citation frequency.
Pure knowledge spillover results from disembodied
knowledge flows, including licensing, patent citations, or
outsourcing agreements. Griliches [17] suggests that patent
citations can be measured as a disembodied form of diffusion.
Moreover, Helleiner [29] indicates that based on the
definition of a patent, technology includes not only legally
guaranteed patents and trademarks but also the sophistication
technique for tangible merchandise.
According to Jaffe et al.[30], Eaton & Kortum[31], and
Hu & Jaffe[32] international patenting is a proxy of the
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
channel for the international diffusion of disembodied
technology. Patents can indicate intellectual property and
measure technology innovation performance [33, 34].
Numerous researchers have taken frequency of patent
citations as an indicator of national innovation
competitiveness (e.g.[16, 35]) , with the importance of a
patient increasing with frequency of citations. Patient
citations thus are measurable innovation indicators of
national competitiveness. Hence, this study adopts patent
citations as a means of disembodied technology diffusion to
investigation. Countries citing their patents to others generate
pure knowledge spillover.
C. Contagion Effects
Lundvall [36] argues that the production and diffusion of
new knowledge occurs in the mutual learning of members,
and that is conducive to the development and diffusion of
new technology. This if this study observes the influence of
social proximity on national innovation performance, it can
identify a similar mode of international interaction. Social
influence occurs when actor behavior, attitudes, or beliefs
involuntarily follow those of others in the same social system.
Contagion is often used to describe the processes involved in
social influence [37, 38]. Social influence theory involves
two processes: communication and comparison [39].
1. Cohesion Mechanism
Communication based on social influence involves direct
contact between ego and alter [40]. Cohesion is the most
common approach to operating a communication process in
social network analysis. While the ego hesitates to make a
decision, he will seek alters who he trusts for consultation,
mostly owing to the relationship of cohesion between them.
The more intimate and frequent interactions between ego and
alter, the greater the influence of alter on the opinion and
behavior of the ego [39]. The frequency, intensity, and
closeness of interaction among cohesive actors leads to
increased recurrence of action than it does among
non-cohesive actors, not only increasing the opportunity to
transmit social clues [41], but also resulting in network
constraints among them. Some social network researchers
interpret cohesion from a group perspective. Festinger [42]
defines cohesion as “the result of all the forces acting on all
members to remain in a group.” Actors in cohesive groups
exhibit greater behavioral conformity and accordant
relationship than those in less cohesive groups. Social
structure is a configuration of social relations among actors
where the relations involve exchange of cherished items that
can be tangible (substance) or intangible (knowledge,
information). Because of exchange, international trade yields
increased opportunities for information sharing and thus
government policies similarity between partner countries [9].
This study thus examine the influence of cohesion
mechanism on national innovative capacity performance.
2701
2. Structural Equivalence Mechanism
The other process of contagion is social comparison. In
searching for a social identity, before the ego acts, it observes
alters’ acts, and then corrects its actions. Ego compares
himself with those alters who he sees as similar in network
aspects [39]. The comparison is actuated if actors are
competing [40]. Therefore, the comparison is most frequently
operated using the concept of equivalence. Equivalent actors
are similarly embedded in the network. The most
comprehensive conception of equivalence is structural
equivalence [43]. The concept of social equivalence exhibits
another socialization process. The actors in the structural
equivalence mode exhibit a similar pattern of relations to
other actors in the social configuration [41], despite not
necessarily having direct ties with one another. The similarity
of patterns arising from social context creates powerful
internalized pressures with which actors must comply [9].
Therefore individuals encountering uncertainty may refer to
structurally equivalent actors to simulate appropriate
responses. Burt [40] proposes that decision-makers are
socialized via the symbolic role-playing of placing
themselves in the position of others. This study thus applies
the structural equivalence model to examine the influence
national innovative capacity on performance.
III. HYPOTHESES
This work examines the performance of national
innovative capacity using social contagion effects, via the
cohesion and structural equivalence models, and through
international diffusion of embodied and disembodied
technology. Regarding the cohesion model, primarily the
significant alter within a cohesive group influence actors who
directly contact one another. In the structural equivalence
model, the alter in the similarity of network position
influence actors and they may not have direct interactions
with. Hence, the hypotheses in this study employed the
contagion model to examine embodied and disembodied
technology diffusion.
A. Cohesion Model
The cohesion model centers on the interaction between
ego and alter. When actors encounter tough questions or deal
with something, their attitude and conduct will lean towards
alters within the same group. This is the social influence
process. The cohesion model incorporates the opinion,
behaviors, attitudes, and policies connecting actors. Therefore,
the policy making of a given country promptly follows the
one of an alter country, since both share the common
evaluation of the costs and benefits from interaction [40].
Hence, this study can assume that the countries within the
same group through cohesion mechanisms can influence the
innovative capacity performance of a certain country. Thus
the hypotheses are:
Hypothesis 1: The performance of national innovative
capacity of a focal country is influenced positively and
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
significantly by those of other countries within a
cohesive group formed through international diffusion
of embodied technology.
Hypothesis 2: The performance of national innovative
capacity of focal country is influenced positively and
significantly by those of other countries within a
cohesive group formed through international diffusion
of disembodied technology.
B. Structural Equivalence Model
Burt [44] argues that ego’s behavior is predicted more
precisely by structural network position than interactions with
others. Because of competition, ego’s making changes will be
readily followed by competitors [39]. An actor will accept an
innovation while perceiving others structurally equivalent to
him applying it. Owing to similarity, actors would experience
the awareness of competition, and then take others as the
paradigm. Therefore, the more similar ego's structural
position with others, the more possible that others would
substitute for ego's positions [40]. According to the Burt's
study, this study can figure out that actors in the structural
equivalence model mean that they are competitive with each
other. Burt applied the concept of structural equivalence to
the study of industrial structures, and he also concluded that
an actor's adopting behavior is triggered by others who are
structurally equivalent in the network. Therefore, this study
has the following hypotheses:
Hypothesis 3: The performance of national innovative
capacity of a focal country is influenced positively and
significantly by those other countries at structurally
equivalent levels defined through international diffusion
of embodied technology.
Hypothesis 4: The performance of national innovative
capacity of a focal country is influenced positively and
significantly by those of other countries structurally
equivalent, defined through international diffusion of
disembodied technology.
C. Comparison
Social contagion effects of the cohesion and structural
equivalence models show theoretically fundamental
difference of mechanisms. Although there may be two
different contagion mechanisms in social proximity, many
scholars all argue that ego’s behavior is more inclined to be
affected by alter having the same network position than by
alter interacting with each other [9, 40, 45, 46]. Hence, the
contagion effect of structural equivalence model should be
stronger than the cohesion model. The hypotheses of
comparison on the performance of national innovative
capacity are examined as the following:
Hypothesis 5: In terms of international diffusion of
embodied technology, the performance of national
innovative capacity between countries with social
proximity structural equivalence is more similar than
those countries with social proximity of cohesion.
Hypothesis 6: In terms of international diffusion of
2702
disembodied technology, the performance of national
innovative capacity between countries with social
proximity structural equivalence is more similar than
those countries with social proximity of cohesion.
IV. METHODOLOGY
A. Data
This investigation employs a sample of 46 countries over
the period from 1997 to 2002, ranked according to the Global
Competitiveness Index of the World Competitiveness
Databank. The social contagion effects dataset contains four
categories: bilateral trade in exports and imports, frequency
of patent citations, aggregate R&D Expenditure and
international patents granted in year t+3. Trade flow data are
mainly obtained from Global Trade Information Services,
Inc.. However, data on imports are more accurate than those
on exports [26, 47, 48], and this study adopts an importing
dataset. Furthermore, Coe et al. [27] found that it is better to
measure trade-related spillover using trade in capital goods
than total trade.
For frequencies of patent citations, the dataset of patents
granted by the United States Patent and Trademark office,
and frequencies of patent citations are obtained from the
NBER Patent Citations Database [49]. Owing to technical
difficulties in analyzing raw data, this investigation gathers
data for the periods from 1997~2002 1 and contains
frequencies of inter-country patent citing and cited. As for the
total R&D expenditure of each country, this investigation
refers to World Competitiveness databank, IMD.
PATENTS represents the number of patents granted in
year t+3 by USPTO due to the average lag between the
application and approval accounted by USPTO and between
the measures of innovative capacity and the observed
realization of innovative output [11]. Considering the
completeness of data collection, this investigation selects 42
countries as the sample owing to materials for some countries
being absent.
Appendix 1 lists the countries studied in this work. The
initial levels of innovative productivity and the legacy of
historical situations of each country represent different
influences on the performance of national innovativeness [3],
and thus Appendix 1 shows both embodied and disembodied
diffusion countries. Appendix 2 lists variable sources and
definitions.
B. The International Technology Diffusion
This work employs social contagion effects to examine
spillovers in international technology diffusion. Since total
national R&D expenditure is positively and significantly
related to international technology diffusion, [18, 50], Xu &
Wang[51] and Shih & Chang[48] propose that international
technology diffusion is measured based on national R&D
1
The original data in NBER was collected until 1999, and Hall, Jaffe and
Trajtenberg continue updating the project and collected data until 2002.
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
expenditure, which must be multiplied by a weighted
coefficient, this study considers total national R&D
expenditure when measuring the degree of international
technology diffusion. Equation (1) shows the formula used to
calculate international technology diffusion.
ITDij = rij × RDi (1)
Here, ITDij represents the degree of technological
knowledge diffusion from country i to country j, RDi is the
R&D expenditure of country i; and rij represents the
fraction of knowledge spillover from country i to country j.
Distinguishing embodied and disembodied forms of
technology diffusion requires establishing two weighting
formulas, rE ,ij ,t and rD ,ij ,t . This study defines the embodied
form of diffusion as rE ,ij ,t [48].
M ij ,t
rE ,ij ,t = l l i ≠ j, i, j, l = 1,2 … ,42
∑∑ Mi =1 j =1
ij ,t
Mij,t represents country j importing capital goods from
country i during year t; l stands for numbers of countries,
from 1 to 42. Regarding trade flows in this study, the quantity
of machinery and equipment imports in one country is
multiplied by total R&D expenditure in another country, and
it imports from 42 countries while they export to this country
so it forms 42 by 42 matrix. Hence, this study assumes that if
a certain country imports more capital goods from other
country, the net importer nation will benefit through
embodied technology diffusion.
Regarding the disembodied technology diffusion, patent
citations represent the linkage to prior knowledge; restated,
the frequencies with which a certain country cites patents
from another country represent the density of pure knowledge
spillovers between the two countries. Thus, the weight of
disembodied technology diffusion is rD,ij,t, defined as:
Cij ,t
rD ,ij ,t = l l
i ≠ j, i, j, l = 1,2 … ,42
∑∑ C
i =1 j =1
ij ,t
Cij,t denotes the frequencies of country j citing patents from
country i during year t; l represents individual countries by
number, from 1 to 42. Patent citations are measured by the
citation frequencies and owing to the reference, a given
country cites patents from 42 countries while they are cited
by this country, it also constitutes 42 by 42 matrix. This study
thus assumes that when a given country cites more patents
from other countries, the patent citing nation will benefit
from disembodied technology diffusion.
C. Contagion Effects
Numerous researchers are interested in the contagion
process of the innovations diffusion[45, 46]. Actors tend to be
affected by the opinions and behaviors of significant others
belonging to the cohesive group or occupying a position of
structural equivalence. This influence process is the
contagion effect.
Burt [40] designed a theoretical framework for the
contagion effects of cohesion and structural equivalence in
the social network by observing the diffusion of medical
innovation proposed by [52]. Thus, this study adopts the
social contagion model devised by Burt [40] to forecast
international technology diffusion among countries. yi is
defined as the patent output in country i, and represents the
realization of national innovative activities in country i. y*i
denotes the expected patent output in country i based on the
response to other countries and ε represents the residual term.
Weight wij is the crucial term in this study, which can
recognize the contagion effects of cohesion and the structural
equivalence model by operating wij, and it measures the
social proximity of country i to country j relative to its social
proximity to other countries, except that country i reveals the
(2) degree of closeness between countries i and j compared to
other countries within the network. The contagion effects
equation is as follows:
⎛ ⎞
yi = ρ ⎜⎜ ∑ wij y j ⎟⎟ + ε j≠i ( )
or yi = ρ yi* + ε , j ≠ i (4)
⎝ j ⎠
Here, yi* = ∑ wij y j , j ≠ i
j
( proximity i to j ) v , k ≠ i (5)
wij =
∑ ( proximity i to j)v
k
The magnitude of exponent v can be measured as the
degree to which country i is reactionary in relying on other
countries [40, 46]. This work operates the contagion effects
of the cohesion and structural equivalence models via wij., and
thus the two models can measure the social proximity of
contagion effects by equation Eqs. (4) and (5). If social
proximity is measured by trade flows or frequency of patent
citations between countries i and j, then wij represents the
cohesion model. On the other hand, if social proximity is
measured via the similarity of relation between country i and
(3) country j, then wij represents the structural equivalence model.
∑ ij j
Since y * = w y , the meaning of
i
yi* is different from the
j
relationship between actors. Consequently, if wij is measured
using the cohesion model, then yi* represents the degree to
which country i responds to the performance behavior of
trading or citation partners. Conversely, if wij is measured
using the structural equivalence model, then yi* denotes the
response of country i to the performance of competitors. The
relationship between yi and yi* represents the degree to
which social contagion process influences international
technology diffusion.
2703
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
1. Cohesion Model
This study employs the two types of diffusion mechanism,
cohesion and structural equivalence models. As for the
cohesion model, the weight matrix W is measured using the
row data, representing the effects of social contagion on
national innovative capacity of importing or patent citing
countries. In this study ITDij denotes the degree of
technological knowledge diffusion via export value or
frequency of patent citations from countries i to j; conversely,
if the weight matrix W is measured using the normalized
column data, this operation exhibits the effect of social
contagion to national innovation performance from exporting
or cited countries. The degree of technological knowledge
diffusion via import value or frequency of patent citations
from countries i to j is represented by ITD ji . Summing the
row ( ITDij ) and column data ( ITD ji ) can investigate the
influence on the performance behavior of national innovative
capacity of the degree of technological knowledge diffusion
via trading or citing partners. According to Burt [40], the
exponent v frames the scope of the influencing process on
ego conception, and a high value indicates a strong
relationship between the closet alters. The weight of influence
wij is constituted as follows:
(ITDij + ITD ji )v , k ≠ i (6)
wijC =
(
∑ ik ITD + ITD ki )v
k
2. Structural Equivalence Model
As for the structural equivalence model, measuring the
extent to which country i and country j requires examining
Euclidean distance, which is the most common method used
by sociologists to measure degree of structural equivalence,
the value of which ranges between zero and one. In this
particular case, when this distance equals zero it means that
the two actors are precisely structurally equivalent. Since the
structural equivalence model measures the relations of the
actors in terms of trading or patent citations, row data and
column data are included in the Euclidean distance equation.
Here, Ri denotes the summation of the degree of technological
knowledge diffusion via export values or frequency of patent
citation to each country in row i, and Ci represents the
summation of the degree of technological knowledge
diffusion via import values or frequency of patent citation
from each country in column i. If
ITDik ITD jk and ITDki ITDkj , then countries i and j are
= =
Ri Rj Ci Cj
structurally equivalent, demonstrating that the degree of
technological knowledge diffusing occurring through their
exports or patent are cited the duplicate proportions of
outcomes to every other country; and the degree of
technological knowledge diffusion occurring through their
imports or patent cite the duplicate proportions of input from
each country. Consequently, the following is used to measure
Euclidean distance.
2704
⎡ ⎛ ITD 2 2
1
⎤ 2 , i ≠ k ≠ j (7)
ITD jk ⎞ ⎛ ITDkj ⎞
d ij = ⎢∑ ⎜ ik
− ⎟ + ∑ ⎜ ITDki − ⎟ ⎥
⎜
⎢ k ⎝ Ri Rj ⎟ ⎜
k ⎝ Ci Cj ⎟ ⎥
⎣ ⎠ ⎠ ⎦
After identifying the structural equivalence between
countries i and j, this study applies the value of Euclidean
distance d ij to the weight wij. The weight wij of the
structural equivalence defined by Burt [40]. d max i
represents the maximum distance between country i and other
countries in the global network. Shih [46] suggests that the
proximity of sector i to j can be represent as the extent to
which d ij is smaller than d max i . Similarly, if the extent to
which d ij is smaller among countries than d max i , it
demonstrates the proximity of country i to j.
wij =
SE
(d max i − dij )v , k ≠ i (8)
∑ (d max i − dik )
v
k
V. RESULTS AND DISCUSSION
This study examines national innovation capacity using
social contagion effects, the cohesion model and the
structural equivalence model via international diffusion of
embodied and disembodied technology. This section presents
the results of global technology contagion effects.
A. Contagion effects
Equation (4) tests contagion effects, and this study
examines the intensity of such effects on national innovative
capacity at the global level, as follows: Equation (6) is
applied in Eqn. (4) to examine the cohesion model; Eqn. (7)
and (8) are incorporated into Eqn. (4) to analyze the structural
equivalence model.
This part represents the contagion effects, cohesion model
and structural equivalence model through international
diffusion of embodied and disembodied technology on NIC
performance, specifically patent output. This study observes
42 countries during 1997 to 2002. Owing to time lag of
innovative realization, this study focuses on patent output
during 2000 to 2005.
Table 1 reveals that all models are significant. As for the
relations between the contagion effects and patent output in
each country as demonstrated by models 1 and 3, the
cohesion mechanism exhibits unexpected negative effects via
embodies and disembodies technology diffusion. However,
regarding the structural equivalence mechanism, models 2
and 4 demonstrate positive and significant relationships
between the contagion effects and NIC performance in each
country. This study infers that countries lean more towards
influencing national innovative capacity through mimicking
the behavior of competitors than that of communication
partners. Furthermore, comparison of the contagion effects in
Table 1 reveals that the structural equivalence mechanism
through embodied technology diffusion outperforms the
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
cohesion mechanism in terms of influencing national
innovative capacity, supporting hypothesis 5. Regarding
disembodied technology diffusion, the structural equivalence
mechanism remains more positive and significant than the
TABLE 1. RESULTS OF REGRESSION ANALYSIS
Dependent variable=(PATENTS)j,t+3
Model 1 Model 2
Embodied spillover via Cohesion -0.463
mechanism (-8.273)
Embodied spillover via
0.517
Structural equivalence
(9.568)
mechanism
Disembodied spillover via
Cohesion mechanism
Disembodied spillover via
Structural equivalence
mechanism
Significance 0.000 0.000
R2 0.214 0.268
Note: Numbers represent standardized beta coefficients; t-values are in parentheses; all standardized coefficients are significant at the 0.001 level.
These empirical results confirm that the contagion effect
in this study seems not entirely consistent with prior works [9,
40, 45, 48]. Therefore, this study will discuss the reasons for
these results, providing broader perspectives on exploring the
influence of national innovative capacity through two
mechanisms of the contagion effect.
B. The effects of Contagion on NIC performance
1. Embodies forms
International technology diffusion in the cohesion
mechanism, the embodied technology diffusion negatively
influences national innovation capacity performance, which
appears inconsistent with previous research. Theoretically,
international technology diffusion positive affects both ego
and alter countries [24, 53]. However, in this study,
international technology diffusion negatively affects
innovative capacity; that is, the more interact its partner
countries, the more the innovation capacity of those countries
is reduced. The reverse effects are observed when this
investigation include developed and developing countries and
those countries develop new-to-the-world technology
differently[11]. On the one hand, developing countries import
embodied technologies form developed countries to upgrade
their productivity and increase efficiency [54]; furthermore,
developed countries export numerous types of machinery and
equipment to developing countries, while developed
countries increase a positive effect to developing countries
innovative capacity. Therefore, lower innovative capacity
countries achieve economic growth and changes in
productivity efficiency through the embodied technology of
the more innovative capacity partner. However, the rent of
embodied technology transfers to domestic innovative
capacity, and is affected by import country absorptive
capabilities[55]. Products just partially contain essential
2705
cohesion mechanism in terms of influencing national
innovative capacity, supporting hypothesis 6. Thus, the study
findings support hypotheses 3, 4, 5 and 6, and do not support
hypotheses 1 and 2.
Model 3 Model 4 Model 5 Model 6
-0.189
(-3.580)
0.518
(9.804)
-0.642 -0.120
(-13.257) (-3.843)
0.917 0.844
(36.533) (27.070)
0.000 0.000 0.000 0.000
0.412 0.842 0.304 0.851
knowledge and techniques on manufacturing[56], and it
cannot learn the technology completely. Acquiring
knowledge involves not simply purchasing or trading goods,
but rather systematic and purposeful knowledge-based
learning and construction [57]. Developing countries do not
exert a valid influence on innovative activity via the
embodied technology of developed partner countries, but
such technology does increase their production efficiency [54,
58]. At the global level, the several higher innovative
capacity countries flow their technology into numerous lower
innovative capacity countries, leading to technology diffusion
negatively impacting cohesion mechanism based on NIC
performance. Additionally, the technological-gap theory[59]
and product life cycle theory[15] regard technological
diffusion as hierarchical diffusion. According to international
technology diffusion with global stratification patterns [15,
21, 27, 48, 60, 61], the findings of this study are consistent
with those of previous works.
Contrarily, the structural equivalence mechanism via
embodied technology significantly and positively influences
NIC performance. Model 2 represents countries that are more
inclined to utilize mimicking behavior with structurally
equivalent competitors through trading embodied
technological commodities. This mechanism demonstrates
that a ego countries and the alter countries are competitors;
restated, they may not communicate directly via embodied
technology exchanges, but their similar network position
leads them to communicate indirectly by trading with third
parties [40]. Owing to the existence of structural equivalence,
a given country can mimic the technology of a competitor
country with a similar network position, thus influencing
their national innovative capacity. On the one hand, countries
with similar network positions employ similar capabilities to
acquire new technologies. On the other hand, while trade
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
action from competitors results in more innovative outputs,
and owing to competition, a focal country has a similar
reaction and then increases its innovative output, thus
influencing national innovative capacity.
This study compares two contagion mechanisms, namely
cohesion versus structural equivalence, to determine whether
national innovation capacity performance is more similar
between countries with social proximity and structural
equivalence than between those with social proximity of
cohesion, as stated in Hypothesis 5. A standard error is
calculated for the difference between two standardized
coefficient estimates of structural equivalence and cohesion
models, with a t test applied to assess the significance of the
difference. The standardized coefficient estimate measured by
the structural equivalence model significantly exceeds that
measured by the cohesion model, and the R2 of the former
model is significantly larger than that of the latter model.
The analytical results support Hypothesis 5, indicating that
the structural equivalence model exerts a more significant
contagion effect than does the cohesion model on the
diffusion of embodied technology affecting global NIC
structures. Restated, NIC performance is triggered more by
the influence of competitors than that of cohesion partners.
In terms of embodied diffusion, countries prefer to learn
from the experiences of others with a similar network
position, since such learning can positively influence national
innovation performance; countries can react to competitors
who are structurally equivalent in terms of embodied
technology diffusion. Policy-making as a means of
influencing innovative capacity cannot be performed in
isolation and decisions of other cohesive or structurally
equivalent countries should be considered in policy-making.
This result is consistent with that of Koka et al. [9], namely
that countries seeking to develop a profitable trading policy
must ensure their policies fit those of other related countries.
2. Disembodied forms
For diffusion of disembodied forms, the standardized
coefficient of the cohesion model is negative and significant.
Like embodied technology diffusion, disembodied
technology is significantly diffused with global stratification
patterns, and this result can be discussed from two
perspectives. First, this investigation at the global level
included developing countries and developed countries; it
may exhibit the reverse effect of cohesion mechanism due to
the large differences in innovative capacity between
developing and developed countries. Second, as discussed
above, owing to low innovative capacity and insufficient
intellectual property, developing countries must cite more
cohesive partner’s disembodied technology from to apply
their R&D and promote their technological advances[54].
Consequently, at the global level, the strong relationship
within cohesive groups has side effects on innovative
capacity. Therefore, the effect of disembodied technology
diffusion among countries within a cohesive group exerts a
negative influence on innovative capacity.
2706
For structural equivalence mechanisms, the standardized
coefficient is positive and significant. Due to the
multi-collinarity between patent output and patent citation,
the structural equivalence model has higher explanatory
power. However, the diffusion of the structural equivalence
mechanism remains an important issue requiring discussion.
A country that is structurally equivalent not only has a similar
network position to a competitor but also similar
technological capabilities to acquire the knowledge of their
competitors; disembodied technology via structurally
equivalent mechanism is more easy to diffuse. Since
disembodied technology diffusion is termed an active
technology spillover, direct learning or purchase of foreign
technological knowledge involves explicitly using
disembodied knowledge in the form of patent applications.
While the actions of competitor countries stimulate increased
patent output and raise national competitiveness, a ego
country in the same network position performs similar and
active R&D to increase their innovation activity. When other
countries remain in a position of structural equivalence with a
ego country, their conduct positively affects innovation
capacity. Consequently, alter countries, as the role of
competition in the same network position, provide a ego
country with positive feedback regarding national innovation
capacity performance via international technology diffusion.
By comparing two contagion mechanisms of disembodied
technology diffusion, as presented in Hypothesis 6, this
investigation applied a t test to assess the significance of the
difference. The standardized coefficient estimate measured
using the structural equivalence model significantly exceeds
that measured using the cohesion model, and the R2 of the
former model significantly exceeds that of the latter model.
Analytical results still support Hypothesis 6, indicating that
the structural equivalence model yields more significant
contagion effect than the cohesion model on the diffusion of
disembodied technology affecting NIC in a global structure.
That is, national innovative capacity performance is
influenced more by competitive countries than cohesion
partner countries.
In terms of disembodied diffusion, the alter countries with
similar network positions remain the main influences on
national innovative capacity of ego countries. However,
international pure knowledge spillover proves effective not
only when technology is obtained from abroad for less than
the original cost to domestic inventors, but also when a
country can absorb and apply technology from abroad.
Additionally, direct learning regarding explicit knowledge of
foreign competitors increases domestic technological
capability and can be actively adopted for innovation
efficiency.
3. Comparison for embodied and disembodied technology
diffusion
Empirically, embodied and disembodied diffusion are not
easily distinguishable, but the measurement in terms of
empirical data can capture and differentiate either embodied
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
or disembodied diffusion. Comparing Models 1 and 3,
involving the coefficient of cohesion mechanism, or Model 2
and Model 4, involving the coefficient of structural
equivalence mechanism, demonstrates that disembodied
diffusion influences national innovative capacity significantly
more than embodied diffusion does. This result indicates a
difference in spillover rigidity between embodied and
disembodied technology diffusion. Notably, rent spillovers
resulting from embodied technology diffusion are more rigid
than pure knowledge spillovers resulting from disembodied
technology diffusion.
Utilizing specialized and advanced intermediate products
that have been invented overseas demonstrates the implicit
usage of technological knowledge embodied in foreign
intermediate goods for producing final output. Furthermore,
the technological knowledge embodied in trading
intermediates is not available to domestic inventors.
Embodied technology diffusion is thus considered a passive
technology spillover that primarily influences changes in
productivity efficient [54]. Restated, embodied technology
diffusion is rigid to knowledge spillover, which is a relatively
weak form of international technology diffusion that
influences national innovative capacity.
Direct acquisition of foreign technological knowledge
involves explicitly using disembodied knowledge in the
forms of formulas, blueprints, drawings, and patent
applications [62]. Pure knowledge spillover occurs
internationally if technological knowledge is obtained from
overseas for less than the original cost to domestic inventors.
Direct learning regarding foreign technological knowledge
increases the domestic technological stock of knowledge that
can be actively adopted for innovation and that influences
technical change. Disembodied technology diffusion is less
rigid for knowledge spillover, and is termed active
technology spillover. More specifically, disembodied
technology diffusion influences national innovation capacity
more significantly than does embodied technology diffusion.
VI. CONCLUSION AND REMARKS
Since globalization, many forms of international
cooperation, such as global supply chains and globalized
R&D, heterogeneously promote a country towards achieving
technological progress and driving economic growth through
international technology diffusion. So does the need to
understand the mechanisms characterizing international
technology diffusion, to identify major influences upon the
performance of national innovative capacity. This study
examines the influence upon national innovative capacity by
network contagion effects of cohesion mechanisms and
structural equivalence mechanisms through international
diffusion of embodied and disembodied technology.
Patents are not only acknowledged as providing a reliable
and unbiased indication of the innovation effort being
expended by a country, but also regarded as a country’s R&D
performance. Two types of potential knowledge generated by
2707
R&D activities are rent spillovers and pure knowledge
spillovers. Rent spillovers occur through embodied
knowledge flows; pure knowledge spillovers are performed
via disembodied knowledge flows. However, heterogeneous
potential knowledge is affected by the network structure of
technology diffusion within the international economy. Two
different diffusion mechanisms, the cohesion mechanism and
the structural equivalence mechanism, exist to examine the
contagion effects of two actors that are social proximate, so
that one actor's performance of innovative capacity can be
expected to trigger the other actor's performance. The
cohesion mechanism, which is based on diffusion by direct
contact and communication, measures the influence upon
innovative capacity performance by cohesion partners.
Conversely, the structural equivalence mechanism, which is
based on diffusion by similarity of network position,
measures the imitation between competitors as a result of
conformity to prevalent norms within structurally similar
sectors.
This study employed the two contagion effects to examine
the international technology diffusion via two social
contagion mechanisms, and empirically tested and compared
the two mechanisms by studying a sample of international
technology diffusion taken from global economic structures.
Social network analysis has been successfully applied in
studying the contagion effects of international technology
diffusion to demonstrate the usefulness of the proposed
methodologies and to find the contagion effect that most
accurately predicts mimetic behavior. From the empirical
results, this study finds the distinguishable influence upon the
performance of national innovative capacity between
countries with different technological diffusion forms and
social proximity. Embodied or disembodied technology
diffusion through structural equivalence mechanisms has
significant influence on the performance of national
innovative capacity. However, a country is affected more by
its structurally equivalent competitors than by its cohesion
partners. In other words, countries are more inclined to take
competitors as a paradigm through international technology
diffusion based on their developing environment. Therefore,
while the leader of a given country makes policies on
technology development via international cooperation, a
country can depend on its internal capability and deliberate
the action of its competitors to accurately shift its policy.
Moreover, embodied or disembodied technology
diffusions through cohesion mechanisms have negative
affects on the performance of national innovative capacity,
which can be regarded as international technology diffusion
via global stratification patterns. In other words, merely
utilizing a cohesion partner’s technology without absorbing
the embodied or disembodied technological rent spillover
into domestic innovation activity will more deeply embed a
country into a large exchange system.
Embodied and disembodied technology diffusions
distinguishably influence the performance of national
innovative capacity. Embodied technology diffusion is more
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
rigid to knowledge spillover and more strongly influences
productivity changes than the performance of national
innovative capacity. Relatively, disembodied technology
diffusion is less rigid to knowledge spillover and which
increases the domestic technological stock of knowledge that
can be actively adopted for innovation and affects technical
change.
In terms of international technology diffusion, policy
makers should refer to their development plans to tune these
technology diffusion mechanisms. Participating in
international cooperation deploys their “international
relationship” strategy to influence their innovative capacity.
Furthermore, the expenditure of research and development
for a country can be regarded as a country’s intention to
develop a national specific capability in technology. However,
without considering their global network position, the
effectiveness of this expenditure is likely to decrease.
The limitations of this study should be acknowledged in
order to identify directions for future research. This study
provides some suggestions for further studies to investigate.
Suggestions are the following for further study: The ego’s
behavior and opinions are not merely determined by
heterogenous mechanisms (others’ behavior and opinions),
but also by endogenous mechanisms (reaction to various
other constraints and opportunities granted by the ego's
conditions). Such a process is typically modeled in sociology
as an autocorrelation model. Owing to the lack of the
endogenous mechanism, this study points out the need for
future research to examine the autocorrelation model of
international technology diffusion to consider both
heterogenous and endogenous mechanism simultaneously.
Second, this study explores the social contagion effect at the
global level, but does not investigate the actions at the block
level of focal countries individually (e.g. Core,
semi-periphery and periphery). With global stratification
patterns, it will be more specific if researchers can focus on
certain countries interacting with others. Finally, this study
centers on social contagion effects and does not utilize other
social network analysis. If researchers can apply more
indicators and the conceptions of social network analysis to
analyze the data, that would be beneficial.
ACKNOWLEDGMENTS
The authors would like to thank Les Davy, National Chi
Nan University Department of computer Science and
Information engineering, for his editorial assistance. Also,
this research was supported by a grant from the National
Science Council of Taiwan for financially supporting this
research under Contract No. 97-2410-H-260-011-MY3. This
support is gratefully acknowledged.
REFERENCES
[1] Adler, P. S., and S. W. Kwon, “Social capital: Prospects for a new
concept.,” Academy of Management Review, vol. 27, no. 1, pp. 17-40,
2708
2002.
[2] Tornatzky, L., and M. Fleisher, The Processes of Technological
Innovation, Lexington, MA: Lexington Books, D.C. Heath and
Company., 1990.
[3] Furman, J. L., and R. Hayes, “Catching up or standing still? National
innovative productivity among ‘follower’ countries, 1978-1999,”
Research Policy, vol. 33, pp. 1329-1354 2004.
[4] Aoki, M., and N. Rosenberg, The Japanese Firm as an Innovating
Institution: CEPR Publication, Center for Economic Policy Research,
Stanford University, 1987.
[5] Marquis, D., The Anatomy of Successful Innovations: Ballinger
Publishing Co., 1988.
[6] Tushman, M., “Managing Communication Network in R&D
Laboratories,” Sloan Management Review, pp. 37-49, 1979.
[7] von Hippel, E., The Sources of Innovations, New York: Oxford
University Press, 1988.
[8] Staniland, M., What is political economy? A study of social theory and
under-development, New Haven, CT: Yale University, 1985.
[9] Koka, B. R., J. E. Prescott, and R. Madhavan, “Contagion Influence on
Trade and Investment Policy: A Network Perspective,” Journal of
International Business Studies, vol. 30, no. 1, pp. 127-147, 1999.
[10] Hu, M.-C., and J. A. Mathews, “China's national innovative capacity,”
Research Policy, 2008, DIO:10.1016/j.respol.2008.07.003.
[11] Furman, J. L., M. E. Porter, and S. Stern, “The determinants of national
innovative capacity,” Research Policy, vol. 31, no. 6, pp. 899-933,
2002.
[12] Griliches, Z., “Patent Statistics as Economic Indicators: A Survey,”
Journal of Economic Literature, vol. XXVIII, pp. 1661-1707,
December 1990, 1990.
[13] Trajtenberg, M., Patents as Indicators of Innovation, Cambridge (MA):
Harvard University Press. , 1990.
[14] Rogers, E. M., Diffusion of Innovations, New York: Free Press, 1985.
[15] Vernon, R., “International Investment and International Trade in the
Product Cycle,” Quarterly Journal of Economics, vol. 153, pp. 190-207,
1966.
[16] Griliches, Z., “Issues in assessing the contribution of research and
development to productivity growth,” The Bell Journal of Economics,
vol. 10, no. 1, pp. 92-116, 1979.
[17] Griliches, Z., “Market value, R&D, and patents,” Economics Letters,
vol. 7, pp. 183-187, 1981.
[18] Griliches, Z., "Productivity and technological change: some
measurement issues," Technology and Productivity: The Challenge for
Economic Policy, pp. 229-231: OECD, 1991.
[19] Bascavusoglu, E., "Patterns of technology transfer to the developing
countries: differentiating between embodied and disembodied
knowledge," TEAM and CNRS Working Papers, 2004.
[20] Papaconstantinou, G., N. Sakurai, and A. Wyckoff, “Domestic and
international product-embodied R&D diffusion,” Research Policy, vol.
27, pp. 301-314, 1998.
[21] Coe, D. T., and E. Helpman, “International R&D spillovers,” European
Economic Review, vol. 39, pp. 859-887, 1995.
[22] Eaton, J., and S. Kortum, “Trade in capital goods,” European Economic
Review, vol. 45, no. 7, pp. 1195-1235, 2001.
[23] Keller, W., "The geography and channels of diffusion at the world’s
technology frontier," National Bureau of Economic Research Working
Paper No. 8150, 2001.
[24] Keller, W., “International technology diffusion,” Journal of Economic
Literature, vol. XLII, pp. 752-782, 2004.
[25] Grossman, G., and E. Helpman, Innovation and Growth in the World
Economy, Cambridge, MA: MIT Press, 1991.
[26] Smith, D. A., and D. R. White, “Structure and dynamics of the global
economy: network analysis of international trade, 1965-1980,” Social
Forces, vol. 70, pp. 857-893, 1992.
[27] Coe, D. T., E. Helpman, and A. W. Hoffmaister, “North-South R&D
spillovers.,” The Economic Journal, vol. 107, pp. 134-149, 1997.
[28] Maskus, K. E., Encouraging International Technology Transfer,
Geneva, Switzerland, 2004.
[29] Helleiner, G. G., “The Role of Multinational Corporation in Less
Developed Countries’ Trade in Technology,” World Development, vol.
3, pp. 161-189, 1975.
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET

[30] Jaffe, A. B., M. Trajtenberg, and R. Henderson, “Geographic
localization of knowledge spillovers as evidenced by patent citations,”
Quarterly Journal of Economics, vol. 108 no. 3, pp. 577-98, 1993.
[31] Eaton, J., and S. Kortum, “International patenting and technology
diffusion: theory and measurement,” International Economic Review,
vol. 40, pp. 537-570, 1999.
[32] Hu, A. G. Z., and A. B. Jaffe, “Patent citation and international
knowledge flow: the cases of Korea and Taiwan,” International Journal
of Industrial Organization, vol. 21, pp. 849-880, 2003.
[33] Mogee, M. E., “Using Patent Data for Technology Analysis Planning,”
Research Technology Management, vol. 34, no. 4, pp. 43-49, 1991.
[34] OECD, Oslo Manual, Proposed Guidelines for Collecting and
Interpreting Technological Innovation Data: OECD, 1997
[35] Austin, D., “An Event Study Approach to Measuring Innovative Output:
The Case of Biotechnology.,” American Economic Review, vol. 83, pp.
253-258, 1993.
[36] Lundvall, B.-A., National Systems of Innovation: Towards a Theorem
of Innovation and Interactive Learning, 1992, Ed. ed., London: Pinter
Publications, 1992.
[37] Leenders, R. Th. A. J., Structure and Influence: Statistical Models for
the Dynamics of Actor Attributes, Network Structure and Their
Interdependence, Amsterdam: Thela Thesis Publishers, 1995.
[38] Leenders, R. Th. A. J., Longitudinal behavior of network structure and
actor a tributes: modeling interdependence of contagion and selection,
New York: Gordon and Breach, 1997.
[39] Leenders, R. Th. A. J., “Modeling social influence through network
autocorrelation: constructing the weight matrix,” Social Networks, vol.
24, pp. 21-47, 2002.
[40] Burt, R. S., “Social contagion and innovation, cohesion versus
structural equivalence.,” American Journal of Sociology, vol. 92, pp.
1287-1335, 1987.
[41] Rice, R. E., and C. Aydin, “Attitudes towards new organizational
technology: Network proximity as a mechanism for social information
processing,” Administrative Science Quarterly, vol. 36, pp. 219-44,
1991.
[42] Festinger, L., S. Schachter, and K. Back, Social Pressures of an
Informal Groups: A Study of Human Factors of Housing, New York:
Harper, 1950.
[43] Lorrain, F., and H. C. White, “Structural equivalence of individuals in a
social network,” Journal of Mathematical Sociology, vol. 1, pp. 49-80,
1971.
[44] Burt, R. S., "A note on cooptation and definitions of constraint," Social
structure and network analysis, P. V. Marsden and N. Lin, eds., Beverly
Hill: Sage Publications., 1982.
[45] Harkola, J., and A. Greve, “Diffusion of technology: cohesion or
structural equivalence?,” in Academy of Management Meeting.,
Vancouver, 1995, pp. 422–426.
[46] Shih, H.-Y., “Contagion effects of electronic commerce diffusion:
Perspective from network analysis of industrial structure,”
Technological Forecasting & Social Change, vol. 75, no. 1, pp. 78-90,
2008.
[47] Kim, S., and E.-H. Shin, “A longitudinal analysis of globalization and
regionalization in international trade: a social network approach,”
Social Forces, vol. 81, no. 2, pp. 445-470, 2002.
[48] Shih, H.-Y., and T.-L. S. Chang, “International Diffusion of Embodied
and Disembodied Technology: A Network Analysis Approach,”
Technological Forecasting & Social Change, 2008, DOI:
10.1016/j.techfore.2008.09.001.
[49] Hall, B. H., A. B. Jaffe, and M. Trajtenberg, "The NBER patent
citations data file: lessons, insights and methodological tools," National
Bureau of Economic Research Working Paper No. 8498., 2001.
[50] Griliches, Z., R&D and Productivity, the Econometric Evidence, p.^pp.
382, Chicago and London: University of Chicago Press, 1998.
[51] Xu, B., and J. Wang, “Capital goods trade and R&D spillovers in the
OECD,” Canadian Journal of Economics, vol. 32, pp. 1258-1274,
1999.
[52] Coleman, J. S., E. Katz, and H. Menzel, Medical Innovation: A
Diffusion Study., New York: Bobbs Merrill, 1966.
[53] Eaton, J., and S. Kortum, “Engines of growth: domestic and foreign
sources of innovation,” Japan and the World Economy, vol. 9, pp.
235-259, 1997.
[54] Kim, J. W., and H. K. Lee, “Embodied and disembodied international
spillovers of R&D in OECD manufacturing industries,” Technovation,
vol. 24, pp. 359-368, 2004.
[55] Cohen, W., and D. Levinthal, “Absorptive capacity: A new perspective
on learning and innovation,” Administrative Science Quarterly, vol. 35,
pp. 128-152, 1990.
[56] Breiger, R., S. Boorman, and P. Arabie, “An algorithm for clustering
relation data with applications to social network analysis and
comparison with multidimensional scaling,” Journal of Mathematical
Psychology, vol. 12, pp. 328-383, 1975.
[57] Teece, D. J., “Capturing value from knowledge assets: the new
economy, markets for knowhow, and intangible assets,” California
Management Review, vol. 40, no. 3, pp. 55-79, 1998.
[58] Özçelik, E., and E. Taymaz, “Does innovativeness matter for
international competitiveness in developing countries?: The case of
Turkish manufacturing industries,” Research Policy, vol. 33, no. 3, pp.
409-424, 2004.
[59] Posner, M. V., “ International trade and technical change.,” Oxford
Economic Papers, vol. 13, pp. 323-341, 1961.
[60] Kojima, K., Direct Foreign Investment: a Japanese Model of
Multinational Business Operations, London: Croom Helm press., 1978.
[61] Geroski, P. A., “Models of technology diffusion,” Research Policy, vol.
29, pp. 603–625, 2000.
[62] Gong, G., and W. Keller, “Convergence and polarization in global
income levels: a review of recent results on the role of international
technology diffusion,” Research Policy, vol. 32, pp. 1055-1079, 2003.

APPENDIX 1 COUNTRIES OF INTERNATIONAL TECHNOLOGY DIFFUSION

Argentina Australia Austria Belgium Brazil
Canada Chile China Colombia Denmark
Finland France Germany Greece Hong Kong
Hungary Iceland India Indonesia Ireland
Italy Japan Malaysia Mexico Netherlands
New Zealand Norway Philippines Poland Portugal
Russia Singapore South Africa South Korea Spain
Sweden Switzerland Taiwan Thailand Turkey
United Kingdom United States

2709
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET

APPENDIX 2 VARIABLES AND DEFINITIONS

Variable Full variable name
Innovative output
Patents j,t+3
ITD
R&D $ j,t
Contagion effects 1
Cohesion (embodied)
Cohesion (disembodied)
Structural equivalence
(embodied)
Structural equivalence
(disembodied)
1. Trade flow data are based on imports of capital goods; Patents are granted by USPTO.
Definition Source
International patents granted in All types of patents granted by USPTO patent database
year t+3 USPTO in country j in year (t+3)
Aggregate R&D Expenditure Total R&D expenditures IMD World Competitiveness Report
Interaction within cohesive Interaction within cohesive group Global Trade Information Services,
group via embodied form of via trade flows Inc. (GTI)
diffusion.
Interaction within cohesive Interaction within cohesive group NBER Patent Citations Database
group via disembodied form of via patent citations
diffusion.
Relation in Structural Relation in Structural equivalence Global Trade Information Services,
equivalence via embodied form via trade flows Inc. (GTI)
of diffusion.
Relation in Structural Relation in Structural equivalence NBER Patent Citations Database
equivalence via disembodied via patent citations
form of diffusion.

2710