Intellectual Property and Knowledge Leakage: Two Sides of the Same Construct?

Abstract

Multinational corporations’ (MNCs’) very existence is closely related to taking advantage of differences in knowledge and expertise around the world in terms of both exploiting existing repositories of knowledge and combining them to create new knowledge (Kogut & Zander, 1993). While co-creating, sharing, and combining knowledge, MNCs may find that their knowledge leaks outside their firm boundaries. Alerting managers to the risk of knowledge leakage, IB literature has many examples of MNCs’ alliance partners appropriating their valuable knowledge (Inkpen, 2000). Terms such as “reluctant loser” have been coined to describe the firm that loses out to its alliance partner’s aggressive efforts to acquire its knowledge (Khanna, Gulati, & Nohria, 1998). In the case of international joint ventures, Hertzfeld, Link and Vonortas’s (2006) study of the effectiveness of intellectual property protection mechanisms used by U.S.-based companies in the formation of research partnerships concludes that “IP protection is a fundamental consideration for all research partnership members” (p. 836). MNCs may find themselves competing with domestic firms that are able to upgrade their skills, often by hiring MNC employees and copying marketing and distribution strategies. R&D, in particular, is one of the least internationalized MNC activities because firms fear that doing so will result in a loss of control over the innovation process and knowledge leakage to competitors (Berry, 2014). In sum, knowledge leakage as an undesirable outcome for MNCs with clear distinction between good guys (holders) and bad guys (violators) is an accepted view in IB literature. This panel calls for the need to nuance this statement. Mike Peng, Shawn M Carraher, and David Ahlstrom argue that IPR concerns may be viewed as a more macro oriented special case of micro-oriented knowledge leakage. Zooming on the debate over IPR between the United States and China, they will also argue that a key to predicting the future of the IPR debate lies in a deeper understanding of the past, which can clear up misconceptions.