Foreign direct investment in weak intellectual property rights regimes – the example of post-socialist economies

Abstract

This analysis attempts to integrate international business theory on foreign direct investment (FDI) with institutional theory on intellectual property rights (IPR) to analyse FDI in Central and Eastern Europe, a region with an IPR regime gap vis-à-vis Western Europe. Starting from the premise that FDI plays a crucial role for technological catching up in Central and Eastern Europe (CEE) via technology and knowledge transfer, this article assesses the role played by IPR regimes as a factor for corporate governance and control of foreign-invested subsidiaries, for their own technological activity, their trade relationships, and networking for technological activity. As a specific novelty to the literature, the influence of the strength of IPR regimes on corporate control of subsidiaries is analysed. The results suggest that IPR-sensitive foreign investment tends to have lower functional autonomy, tends to cooperate more intensively within its transnational network and is still technologically more active than less IPR-sensitive subsidiaries.