H-1B and L-1 visa-sponsored guest workers in the USA: An analysis of the strategic impact of Indian and other firms

Organizational sponsors of guest workers to the United States claim foreign-born workers enhance productivity and innovation. Drawing upon a unique dataset of all organizational sponsors of guest workers in the United States from 1993 to 2008, we find a 10% increase in guest worker sponsorship is associated with a 2.2-3.1% increase in patenting within firms. Furthermore, we examine how organizational industry and country of origin are associated with the effects of guest worker sponsorship on organization-level measures of innovation and productivity. Despite an overall within-firm positive association between sponsorship and patenting, higher percentages of a firm's workers on visas are associated with lower patenting, but higher labor productivity. Firm-level industry and country of origin heterogeneity is significantly related to the relationship between guest work sponsorship and both patent-related and nonpatent investment in innovation such as research and development (R&D) expenditures. Semiconductor firms and universities spend more on R&D in conjunction with guest worker sponsorship, while semiconductor companies and hardware companies patent less. We discuss theoretical and human resource implications, and offer suggestions for future research.