Technological radicalness, R&D internationalization, and the moderating effect of intellectual property protection

Abstract

Drawing on insights from the resource-based view of the firm, this paper examines the link between the radicalness of the firm's technologies and the extent of its exploitation and exploration R&D activities abroad, with an additional focus on the level of the host country's intellectual property (IP) protection as a force moderating this link. It uses information about greenfield foreign direct investment by 185 U.S. publicly-traded manufacturing firms in the period 2003–2013 to demonstrate that technological radicalness is positively associated with the number of exploration and exploitation R&D projects. While the level of IP protection is shown to have a moderating effect, this is nuanced: firms with more radical technologies pursue more exploration R&D projects in countries with stronger IP protection; in turn, the number of exploitation R&D projects is driven by those undertaken in countries with weaker IP protection. The findings have both managerial and policy implications.