Managing Valuable Knowledge in Weak IP Protection Countries

Heather Berry, Associate Professor of International Business, George Washington University School of Business

Journal of International Business Studies, March 2017

Abstract: Although knowledge assets provide multinational corporations with competitive advantages in foreign markets, it can be difficult for firms to protect their knowledge in foreign countries – especially countries with weak intellectual property (IP) protection. Building on and extending the knowledge management, institutional theory and expatriate literatures, this paper explores whether home country expatriates can substitute for weak IP protection and drive an increase in more and more valuable knowledge transfers to foreign operations located in weak IP protection countries. Because of their ties to headquarter, knowledge of parent firm assets, priorities and routines, and activities in local operations, I argue that home country expatriates can transform the local operation to offer higher protection for parent firm knowledge in weak IP countries in ways that local managers cannot. The results from a comprehensive panel of US multinationals suggest that home country expatriates can substitute for weak IP protection, but that this effect is contingent on the manufacturing and knowledge capabilities of foreign operations for higher value parent firm knowledge transfers. Overall, this paper extends our understanding of the global management and protection of knowledge by MNCs by exploring how organizational practices can buffer country-level institutional deficiencies for firm knowledge.

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