Patent Laws, Product Life-Cycle Lengths, and Multinational Activity

Abstract

Do intellectual property rights influence multinationals' manufacturing location decisions? My theoretical model indicates that countries with strong patent laws attract multinational activity, but only in sectors with relatively long product life cycles. By contrast, firms with short life-cycle technologies are insensitive, because offshore imitation is less likely to succeed before obsolescence. I document strong empirical regularities consistent with the model using a panel dataset on the global operations of US-based multinational firms and a new measure of product obsolescence. Moreover, my identification strategy allows me to isolate the causal effect of patent laws on multinational activity. (JEL D92, F23, K11, L60, O34, R32)

Companies learning to innovate in recessions

“…First, I clarify that controlling for industry fixed effects should mitigate this concern to the extent that product development cycles are industry-specific. Second, in Row (15), I follow Bilir (2014) to classify industries by their product lifecycle and show that results hold excluding industries with intermediate (around 9 years) to long product cycles (between 10 and 11 years).…”

Host-Country Traits, Intra-Firm Technology Transfer and Competitive Advantage: A Conceptual Study

“…Next to be focused would be the different technology transfer requirements imposed by the host country. Forcing MNCs to hire local labour, making their technologies available to local entrepreneurs, restricting imports, requiring them to avail suppliers locally are some of the impositions of the host country that affect the MNC's profit maximizing behaviour thus depressing the amount of technology transfer (Kokko, 1992 (Nune H., 2012;Berry, 2014), host country market size (Gunnar, 1996), GDP and fixed entry costs (Hayakawa et al, 2010) the laws, rules and regulations, systems and policies, customs, traditions and norms of the host country (Chesbrough, 1999), Intellectual Property Rights (William, 2014& Bilir, 2014, FDI supportive environment (Shujiro et al, 2006), tax policies and tax credits (James, R., 1994;Maskus, 2004), economical and technological advancements (Cantwell, 1998), technology policies technology licensing payments , capital market restrictions, R&D expenditures (Maskus, 2004) and domestic competition (Sinani and Meyer, 2004).…”

Intellectual property in a globalizing world: issues for economic research

“…While several studies using aggregate data suggests that it does, an excellent paper using micro data noted that the impacts vary with product features, most importantly the length of a standard product life cycle across industries (Bilir 2014). The author developed a measure of product obsolescence and related US multinational activity across countries to the GP index and other controls.…”