Can Firms Import Innovation?The Impact of H-1B Visa Sponsorship on Company Innovation & Performance

Abstract

Immigration policy has always been a controversial topic in the United States of America. There have been studies published on the economic implications of the H-1B visa program but there is a gap in research on the innovation and financial implications for companies that hire H-1B workers. This thesis will focus on measuring the impact of H-1B workers on company performance by creating dynamic panel dataset using data from the Department of Labor and Wharton Research Data Services. This thesis uses simple linear regressions, fixed effects regressions and general methods of moments to measure H-1B employees impact on innovation and company performance. The analysis shows that H-1B employees on average have a positive impact on the research and development spending as well as the operating margin of their employer. This result was consistent with human capital theory assumptions, that more educationally adept workers contribute positively to firms and society. For the US to continue to stay at the forefront of innovation, high skilled labor is required for American companies. As reforms to the H-1B program are being proposed, this thesis aims to begin a conversation on immigration and innovation using empirical evidence.