Premium
Intellectual property rights, product complexity and the organization of multinational firms
Author(s) -
Naghavi Alireza,
Spies Julia,
Toubal Farid
Publication year - 2015
Publication title -
canadian journal of economics/revue canadienne d'économique
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 69
eISSN - 1540-5982
pISSN - 0008-4085
DOI - 10.1111/caje.12161
Subject(s) - outsourcing , intellectual property , multinational corporation , business , industrial organization , product (mathematics) , transaction cost , database transaction , commerce , procurement , marketing , computer science , database , geometry , mathematics , finance , operating system
Abstract This paper studies how the intellectual property right (IPR) regime in destination countries influences the decision of firms between procurement from related parties and from independent suppliers while the latter may involve technology sharing or not. Using firm‐level data on the mode choice for each transaction and a new product complexity measure, results confirm that firms are generally reluctant to source complex goods from outside firm boundaries. However, when technology is shared, IPRs promote outsourcing of more complex goods whereas without technology sharing, IPRs promote outsourcing of less complex products that are prone to reverse engineering and simpler to imitate.