Intellectual Property Infringements Due to R&D Abroad? A Comparative Analysis Between Firms with International and Domestic R&D Activities

Abstract

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp10099.pdf Non-technical SummaryBy internationalising R&D activities, firms can improve their chances to respond to local demands and benefit from local knowledge globally. However, differences in culture and the legal system can challenge firms and lead to higher costs. Furthermore R&D activities abroad are often considered to cause IPR infringements, especially in the case of weak intellectual property protection systems. This paper aims at analysing whether firms with international R&D activities are confronted with a higher risk of intellectual property infringements (IPR) than firms with domestic innovation processes only. The paper differentiates between specific types of infringements: the usage of firms' technical inventions, product piracy and copying of corporate names and designs. The analysis is based both on a qualitative explorative study which consists of six interviews, involving five German companies active in China and aGerman legal advisor for intellectual property protection as well as on an empirical study. The empirical study is based on the data of the Mannheimer Innovation Panel (MIP).The explorative study showed that the involved firms disbelieve that R&D activities in China increase the risk of IP infringements, that they all entered the Chinese market with well prepared IP protection and despite the fact that they were all facing IP infringements, these cases turned out to be manageable. The results of the empirical analysis indicate that international innovation activities lead to a higher risk of infringements of technological knowledge. However, firms whose R&D activities are only based in their home countries face an increased risk of product piracy. By differentiating between host countries with weak and strong intellectual property rights, it has been found the effects from both kinds of countries do not vary from each other. A larger scope of innovation processes abroad also causes a higher likelihood of infringements from countries in which the firms innovate abroad.Infringements from countries where the firms do not operate R&D activities are driven by the export intensity of the firm. Das Wichtigste in Kürze AbstractThis paper aims at analysing the risk of intellectual property (IP) infringements by competitors from abroad and in particular whether this risk is higher for international innovating firms. We distinguish three different type...

Pursuing opportunities in distance: the determinants of overseas R&D by Chinese multinationals

“…This study is motivated by the increasing attention being paid to EMNEs' international R&D expansion (Piperopoulos et al, 2018;Purkayastha et al, 2018) Second, our research introduces institutional factors as boundary conditions and demonstrates the importance of host country IPR protection and home country political ties for the facilitation of EMNEs' overseas R&D intensity in knowledge and economically distant countries. While some studies have found that IPR protection reduces the risk of being infringed by local competitors and enables DMNEs to benefit from R&D efforts (Schmiele, 2013;Bruno et al, 2021), we instead find that IPR protection is not a favorable factor for EMNEs engaging in R&D abroad. For EMNEs from countries with weak institutions, the strong IPR protection of host countries hinders effective knowledge acquisition and increases the risk of infringement, which then decreases their overseas R&D intensity in knowledge and economically distant countries.…”

“…In light of the dual motivations of EMNEs, our research aims to resolve this gap by shedding light on two relevant dimensions of institutional distance, thereby providing a deeper understanding of the role of knowledge and economic distance in promoting EMNEs' overseas R&D intensity. Second, this research enriches the extant findings in the literature of host country IPR and overseas R&D. Previous studies mainly focus on DMNEs (Schmiele, 2013;Bruno et al, 2021); however, DMNEs and EMNEs are fundamentally different. We demonstrate the negative moderating role of IPR protection in the relationship between knowledge distance, economic distance, and EMNEs' overseas R&D intensity.…”

“…Moreover, host country rules and laws related to IPR protection are difficult to comprehend, causing EMNEs to face great risks of infringement lawsuits (Ahammad et al, 2018). To address the constraints imposed by different IPR regimes, recent innovation literature has examined the impact of IPR protection on overseas R&D (Zhao, 2006;Schmiele, 2013), cross-border R&D collaboration (Hagedoorn et al, 2005), and innovation performance (Wu et al, 2019;Bruno et al, 2021). However, existing studies mainly analyze developed-market multinational enterprises (DMNEs) and suggest that it is difficult for firms to protect their knowledge assets in weak IPR institutions and to benefit from overseas R&D activities (Schmiele, 2013;Bruno et al, 2021).…”

“…To address the constraints imposed by different IPR regimes, recent innovation literature has examined the impact of IPR protection on overseas R&D (Zhao, 2006;Schmiele, 2013), cross-border R&D collaboration (Hagedoorn et al, 2005), and innovation performance (Wu et al, 2019;Bruno et al, 2021). However, existing studies mainly analyze developed-market multinational enterprises (DMNEs) and suggest that it is difficult for firms to protect their knowledge assets in weak IPR institutions and to benefit from overseas R&D activities (Schmiele, 2013;Bruno et al, 2021). In recent research, Yoo and Reimann (2017) argued that weak IPR protection enables EMNEs to capture knowledge spillovers, which may be more important than protecting acquired knowledge assets.…”