Enforcing Intellectual Property Rights in Weak Appropriability Regimes

Abstract

Many emerging economies are characterised by weak appropriability systems and absent legal systems to punish imitators. This places foreign firms’ intellectual property rights at risk, because existing appropriation methods, such as patents or secrecy, cannot function effectively. This concern especially applies to China, the empirical context of this article. Such adverse conditions force managers to devise new strategies to safeguard their firms’ intellectual property rights. Yet no evidence describes whether strategies exist, which forms they take, how they have evolved or how they get implemented. This article addresses this knowledge gap and explores strategies that managers have developed to achieve de facto protection, despite China’s weak appropriability system. The analysis systematically explores 13 cases of foreign firms with wholly owned subsidiaries in China. The findings confirm that de facto strategies exist, describe how they work and detail how they were achieved. The findings suggest implications for both managers and academics.