Modes of <scp>F</scp>oreign <scp>D</scp>irect <scp>I</scp>nvestment and <scp>I</scp>ntellectual <scp>P</scp>roperty <scp>R</scp>ights Protection: Wholly‐owned or Joint Venture? Firm‐level Evidence from Taiwanese Multinational Manufacturing Enterprises

Chen, Po-Lu

doi:10.1111/roie.12054

Cited by 8 publications

(6 citation statements)

References 22 publications

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“…Although FDI establishment and ownership decisions can indeed be related to IPR issues, we also ruled out studies concentrating on how IPR protection affects the mode of FDI in terms of the proportion of equity invested, that is wholly owned investment or equity joint‐venture (see, e.g. Leahy and Naghavi, ; Chen, ; Kyrkilis and Koboti, ), and of establishment, that is Greenfield FDI or M&As, since the focus of our review is on how IPRs affect the FDI location (country) choice.…”

Section: Methodsmentioning

confidence: 99%

What Do We Know About the Impact of Intellectual Property Rights on the Foreign Direct Investment Location (Country) Choice? A Review and Research Agenda

Noon

Vita

Appleyard

2018

Journal of Economic Surveys

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Despite a longstanding debate, at both a theoretical and empirical level, research on the relationship between foreign direct investment (FDI) and intellectual property rights (IPRs) remains scant and ambiguous. As a result, the link between IPR strength and multinational enterprises' (MNEs) propensity to invest is unproven and seemingly dependent on a number of factors. We critically review the theory and evidence of the influence of IPRs on FDI and MNEs' investment location (country) decisions both to 'take stock' of existing knowledge of this relationship and, by identifying gaps in, and shortcomings of prior work, develop a fruitful research agenda. We find that existing empirical work on the IPR-FDI nexus, though skewed in favour of a positive relationship between IPR protection and FDI, is fragmented, inconclusive and unable to square the conflicting theoretical predictions on how the strength of IPRs can affect MNEs' FDI location decisions. Several issues and challenges are highlighted to explain the difficulties of the collective body of past empirical work to provide a definite answer to the question of the impact of IPRs on FDI, from which valuable recommendations are proposed to guide future applied research.

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Section: Methodsmentioning

confidence: 99%

What Do We Know About the Impact of Intellectual Property Rights on the Foreign Direct Investment Location (Country) Choice? A Review and Research Agenda

Noon

Vita

Appleyard

2018

Journal of Economic Surveys

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“…Employing an overlapping generations model, Morita and Sugawara (forthcoming) also show that FDI is the engine of growth in developing countries that enables them to escape from the poverty trap. In addition, Chen's () empirical work on the choice of multinationals of ownership structure suggests that foreign investors would enter a country without LERs, and that FDI is an important channel for developing countries to absorb technology, which supports economic growth. These studies imply that there exists a significant relationship between LERs and growth as we expect that the relaxation of LERs will attract FDI.…”

Section: Introductionmentioning

confidence: 99%

“…Chen () reports that LERs were recently relaxed in the Philippines, Indonesia and Malaysia as well as in China and Thailand.…”

mentioning

confidence: 99%

Does Globalization Foster Economic Growth?

Morita

Takatsuka

Yamamoto

2015

Japanese Economic Review

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This article examines the effects of globalization, by especially focusing on the relaxation of local equity requirements (LERs) in developing countries. By constructing an endogenous growth model, where profit leakage to the South through LERs plays a key role, we obtain the following results. First, the relaxation of LERs in the South drives the relocation of firms from the North to the South, yielding a U-shaped growth rate. Second, our numerical simulations suggest that a sufficient relaxation of LERs is beneficial for the South, although the shared profit of joint ventures is maximized through the use of LERs. JEL Classification Numbers: F0, O31.

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“…Early empirical studies generally suggest that MNEs preferred JVs over WOS if they were entering a host country with strong IPR protection (Mansfield, 1996;Chun, 2008;and Chen, 2013). In contrast, Javorcik and Saggi (2010) could not find any evidence to support the hypothesis that stronger IPR protection increases the propensity to invest by means of JV.…”

Section: The Impact Of Ipr Protection On Entry Mode Choicementioning

confidence: 97%

“…IPR protection, in particular, influences FDI strategy. In general, MNEs tend to invest in wholly-owned subsidiaries (WOS) if IPR protection is weak in the host country (Lee & Mansfield, 1996;Chen, 2013). On the other hand, joint ventures (JVs) are more likely to be chosen when IPR protection is stringent (Leahy and Naghavi, 2010;Chen, 2013) as the stronger protection of intellectual property is expected to lower the risk of imitation by partners.…”

Section: Chapter 1 Introductionmentioning

confidence: 99%

The impacts of institutional differences in relation to intellectual property rights protection on foreign market direct investment: FDI inflows and modes of foreign market entry

Mo¹

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<p>This Master‘s thesis seeks to consider the impacts of institutional distance regarding IPR protection on Foreign direct investment’s (FDI) internationalization strategies. Estimated at approximately US$ 1.8 trillion in 2015 and sitting at its highest level since the global economic and financial crisis in 2008 (UNCTAD, 2016), FDI flows are fast becoming a focal issue of global business. Developing Asia, for example, has emerged as the world’s largest FDI recipient region in the world, which has attracted a wide and public attention. China, in particular, is the largest recipient of FDI among the emerging economies. In 2014, it overtook the US as the most popular destination for multinational enterprises (MNEs). To date, most academic interest has focused on how the institutional environment of the host country affects both the overall volumes of FDI (e.g., Lee & Mansfield, 1996; Smarzynska Javorcik, 2004), and the modes of entry strategy (e.g., McCalman, 2004; Dikova & Witteloostuijn, 2007). However, other areas of research also consider institutional distance, and the magnitudes and asymmetric effects of institutional distance (e.g., Cuervo-Cazurra & Genc, 2011; Phillips, Tracey, & Karra, 2009; Zaheer et al., 2012). In this context, this thesis, uses China as a sample of FDI recipient to seek to understand how the directions of institutional distance affect FDI’s flows and MNEs’ choice of entry mode into the host country. In particular, the research questions being addressed in this study are: (1) How does the bidirectional distance between home and host country regarding IPR protection affect FDI’s inflows to China? and (2) How does this bidirectional distance regarding IPR protection influence MNEs’ choice of entry mode? Using a quantitative research design, two dependent variables are examined in this study: FDI inflows and entry mode (wholly-owned subsidiaries (WOS) versus joint ventures (JVs)). Using the institutional theory as its theoretical underpinning, this study hypothesizes that IPR distance between home and host countries negatively affects FDI inflows to the host market. It also hypothesizes that IPR distance is positively related to MNEs’ choice of WOS as an entry mode as opposed to JVs. Both hypotheses build on the new notion regarding the directions of institutional distance that MNEs’ strategies and behaviours are divided into positive and negative directions. This consideration of directions of institutional distance differs to that of the general institutional approach, which typically clusters all regulative, normative and cognitive pillars within the institutional distance. However, this research focuses on the single regulative distance of IPR protection. Using the 691 collected observations of FDI flows to China from 2006 to 2012, hypothesis 1 was tested by employing the estimation techniques of panel linear regression. To further assess hypothesis 2, 801 instances of foreign market entry of FDI in China between 2008 and 2012 were analysed by logistic regression. From the panel linear regression model, the empirical results show that the larger the distance of IPR protection between home and host countries, the fewer the flows of FDI that entered into China. Such results are consistent with previous mainstream literature suggesting that greater institutional distance significantly diminishes the MNEs’ intentions to invest (e.g., Du, 2009; Berry et al., 2010). Moreover, logistic regression for hypothesis 2 reveals that IPR distance appears to be significantly and positively associated with the choice of WOS. This means that the tendency of MNEs from countries with a higher distance of IPR protection to enter China’s market by means of WOS (as opposed to JVs) will decrease. This result is in line with previous studies that note that larger institutional distance is associated with a lower level of equity ownership mode, such as JVs over WOS (e.g., Xu et al., 2004; Xu & Shenkar, 2002; Estrin et al., 2009). The greatest takeaway from this study is that it advances knowledge about the impact of the directions of IPR distance and provides new opinions on the debate around the asymmetric effect of institutional distance on internationalization decisions. This study also offers practical implications for both firm managers and public policy makers.</p>

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Modes of Foreign Direct Investment and Intellectual Property Rights Protection: Wholly‐owned or Joint Venture? Firm‐level Evidence from Taiwanese Multinational Manufacturing Enterprises

Cited by 8 publications

References 22 publications

What Do We Know About the Impact of Intellectual Property Rights on the Foreign Direct Investment Location (Country) Choice? A Review and Research Agenda

What Do We Know About the Impact of Intellectual Property Rights on the Foreign Direct Investment Location (Country) Choice? A Review and Research Agenda

Does Globalization Foster Economic Growth?

The impacts of institutional differences in relation to intellectual property rights protection on foreign market direct investment: FDI inflows and modes of foreign market entry

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