Intellectual Property Protection in the Global Arena - Appropriability Hazard and Competitive Threats

Abstract

We study how firms alter their intellectual property (IP) protection strategy in response to different multi-level global competitive threats that are engendered by semi-globalization. We suggest that semi-globalization yields a varying intensity of competition that reflects in uneven appropriability hazard across levels. At the macro level, firms increase the breadth of their IP protection strategy in response to a rise in the economic globalization of their home country. This is because a greater involvement of the home economy in global economic transactions makes the firm’s intangibles more visible and raises the firm’s perceived potential competitive threat. At the meso level, firms respond to the perceived actual competitive threat to their intangibles from global industry rivals also by increasing the breadth of their IP protection strategy, but in this case as a result of a bandwagon pressure. However, the combination of the two threats lowers the extent of the firm’s breadth of IP protection strategy. This is because the firm perceives the potential threat emanating from a globalized home economy as less challenging when it has already aligned to the greater breadth of the IP protection strategy of its global industry rivals. We test and find support for our arguments based on a sample of 1,572 world’s top R&D multinationals over the period 2013-2015.