Institutional Outsiders and Insiders: The Response of Foreign and Domestic Inventors to the Quality of Intellectual Property Rights Protection

Plain language summary This study examines how national competitiveness, measured as productivity per worker, is fostered within an economy using a sample of 90 developed and developing economies. We build upon Porter's popular Diamond Model, but extend it by adding the quality of public governance and extent of multinational enterprise penetration as two additional elements. Our study shows that not all four elements of the original Diamond Model are required for an economy to be competitive. Instead, we find that there are four distinct paths to high levels of national competitiveness. Context for intense rivalry among firms appears in all four paths. Results also suggest that public governance quality is key to national competitiveness. The extent of multinational enterprise penetration, however, is not. Technical summary We examine Porter's Diamond Model in conjunction with multinational enterprise (MNE) penetration and governance quality as a system of elements that collectively affect national competitiveness. Utilizing fuzzy‐set analysis and data on 90 nations, we identify four configurations sufficient for high national competitiveness, all of which exhibit high governance quality as a core condition. In these four configurations, the extent of MNE penetration is either absent or does not matter, and strength in all Diamond Model elements is neither necessary nor sufficient for high national competitiveness. Uncovering these patterns allows us to advance a more comprehensive theoretical framework emphasizing public governance and the ways in which elements of the Diamond Model, governance quality, and MNE penetration combine as complements or substitutes to affect national competitiveness. Copyright © 2016 Strategic Management Society.

Section: Discussionmentioning

confidence: 99%

National Competitiveness and Porter's Diamond Model: The Role of MNE Penetration and Governance Quality

Fainshmidt

Smith

Judge

2016

“…We also contribute to the emergent literature on innovation and IP regimes in global strategy (Chittoor, Aulakh, and Ray, 2015;Khoury, Cuervo-Cazurra, and Dau, 2014;Monteiro and Zylbersztajn, 2015) by showing that institutions affect not only firms' own innovation activities, but the ways they engage with others in that process. Finally, we contribute to research on outsourcing, and R&D outsourcing in particular, by moving beyond analyzing outsourcing as an entry mode (Lewin, Massini, and Peeters, 2009).…”

Section: Introductionmentioning

confidence: 89%

“…2010). While national institutions define the national IPR law (Khoury et al, 2014), the subnational institutions within the host country shape contractual hazards and, thereby, influence the degree of local R&D outsourcing. However, such external knowledge sourcing critically depends on the effectiveness of IPR protection in the host environment.…”

Section: Quality Of Subnational Institutionsmentioning

confidence: 99%

“…However, such external knowledge sourcing critically depends on the effectiveness of IPR protection in the host environment. While national institutions define the national IPR law (Khoury et al, 2014), the subnational institutions within the host country shape contractual hazards and, thereby, influence the degree of local R&D outsourcing. Impartial, effective, and non-corrupt formal subnational institutions reduce contract enforcement and drafting costs.…”

Section: Quality Of Subnational Institutionsmentioning

confidence: 99%

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MNE Subsidiaries’ Outsourcing and InSourcing of R&D: The Role of Local Institutions

Santangelo

Meyer

Jindra

2016

Plain language summary The rules for business vary not only between countries, but within countries. Subsidiaries of multinational enterprises (MNEs), thus, have to consider both the national level and the local context when designing their business practices. To examine this impact, we study R&D outsourcing in four Eastern member states of the European Union and find that local R&D outsourcing is used more frequently where local institutions are strong. However, this local impact depends on the MNE's overall knowledge sourcing practice and is weaker when MNE subsidiaries’ knowledge management prioritizes external sources of knowledge. Technical summary Multinational enterprises (MNEs) face multiple institutional contexts across and within countries. We analyze subnational institutions in the local environment of MNE subsidiaries to investigate their impact on subsidiaries’ knowledge sourcing‐strategies. Drawing on institutional and transaction cost economics, we argue that the degree of local R&D outsourcing is greater in high quality subnational institutional contexts. However, the quality of local institutions has less impact on the degree of R&D outsourcing by subsidiaries that are more open to external knowledge. These subsidiaries are more experienced in collaborating with external partners and, thus, have developed internal mechanisms to protect their intellectual property even in low quality institutional contexts. We test our arguments on a survey of MNE subsidiaries in four Eastern member states of the European Union. Copyright © 2016 Strategic Management Society.

“…Currently, we focus on aspects of formal institutions (e.g., veto points, nature of elected representation, or an independent judiciary), informal institutions (e.g., administrative implementation, culture, religion, openness, or corruption), and micro-level risks that target specific aspects of business (e.g., intellectual property, importing restrictions, specific regulations, or transfer pricing rules). While the literature has downplayed the micro riskbut which has still been studied in a number of contexts, particularly intellectual property (e.g., Khoury, Cuervo-Cazurra, & Dau, 2014) and in the attempt at MNEs to gain legitimacy (e.g., Bucheli & Salvaj, 2018), we would argue that, more importantly, our conception of institutions does not account for the nature of the political marketplace and the philosophy, intent, and strategy of the political actors responsible for such outcomes.…”

Section: Rethinking Institutional Structure In Global Strategy Theomentioning

confidence: 96%

Varieties of populism

Devinney

Hartwell

2020

101

Research Summary The recent electoral popularity of populism suggests our understanding of global and domestic institutions and their impact and relevance to international business may require adjustment. In particular, the literature may be omitting key variables as to what the political environment entails. We propose a framework for understanding the differing varieties of populism. We examine what channels populist thought operates through and how various strains of populism concentrate on different facets of society. We articulate an operational definition for international strategy based upon prior research in economics, political science, and history. This framework is incorporated into current research on institutional theory as applied in international business, with the goal of proposing a more nuanced and foundational view of institutional environments and how they impact global strategy. Managerial Summary The surge of populism globally—but especially in developed economies—has highlighted new perils for business strategy. Our current models of strategic thinking have not yet caught up to the reality of populism's moment, nor have they accurately captured what are increasingly important facets of a political system, such as traits of specific leaders. This paper examines the need to incorporate new perspectives on institutions into global strategy. In particular, we highlight the various varieties of populism—whether it focuses on economic, social, or political ends—and how each approach can impact a business in a different manner. In doing so, we provide some clarity and guidance for managers faced with political turbulence.