Host Country’s Intellectual Property Rights and Firm’s Equity Participation

Host Country’s Intellectual Property Rights and Firm’s Equity Participation There has been an important debate on whether the degree of intellectual property rights (IPR) protection in a host country affects the choice of ownership structure of a transnational firm (TNF) for its affiliate. It is argued that a TNF’s equity participation in its affiliate is used to exert control and to protect its assets. Firms with greater equity ownership can control better the extent of the technology spillover, and thus compensate for weaker IPR protection in the host country, than can firms that do not have as large an equity participation in their affiliates. Using a unique data set of a newly developed country’s (South Korea) TNFs, this paper shows that there is a negative relationship between a host country’s standards of IPR protection and a TNF’s equity participation. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Host Country’s Intellectual Property Rights and Firm’s Equity Participation

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Publisher
Springer US
Copyright
Copyright © 2008 by Springer Science+Business Media, LLC.
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-008-9188-6
Publisher site
See Article on Publisher Site

Abstract

There has been an important debate on whether the degree of intellectual property rights (IPR) protection in a host country affects the choice of ownership structure of a transnational firm (TNF) for its affiliate. It is argued that a TNF’s equity participation in its affiliate is used to exert control and to protect its assets. Firms with greater equity ownership can control better the extent of the technology spillover, and thus compensate for weaker IPR protection in the host country, than can firms that do not have as large an equity participation in their affiliates. Using a unique data set of a newly developed country’s (South Korea) TNFs, this paper shows that there is a negative relationship between a host country’s standards of IPR protection and a TNF’s equity participation.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 19, 2008

References

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