Abstract
While scholars have long recognized the key role of intellectual property rights (IPR) in value appropriation from innovation, less is known about foreign multinational enterprise (MNE) IPR strategies in emerging markets with weak IPR institutions. We examine how foreign MNEs evaluate the relative effectiveness of secrets and patents in response to their partnership and collocation with local emerging market firms (EMF), contingent on regional IPR development levels in the host country and IPR institutional distance between MNE home and host countries. Using data on 407 MNEs from the China Innovation Survey, we find that both partnership and collocation with local EMFs increase MNEs’ perceived effectiveness of secrets relative to patents. These effects are mitigated by regional IPR development levels in emerging markets and are strengthened by IPR institutional distance between MNE home and host countries.
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