Are emerging market MNEs more attracted towards better patent enforcement regimes when undertaking greenfield R&D-focused FDI?

Wu, Ludan, Sutherland, Dylan and Anderson, John R (2023) Are emerging market MNEs more attracted towards better patent enforcement regimes when undertaking greenfield R&D-focused FDI? Transnational Corporations, 30 (2). pp. 1-36. ISSN 1014-9562

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Abstract

Multinational enterprises in emerging markets (EMNEs), owing to weak enforcement of intellectual property rights (IPR), face challenges when undertaking domestic innovation. As a result, they may search for superior IPR environments in which to create greenfield projects focused on research and development (R&D) and innovation. We hypothesize that the likelihood that an EMNE chooses to invest in an R&D-focused greenfield project over other FDI projects is positively associated with increased levels of host-country patent enforcement protection relative to its home market. In addition, we hypothesize that EMNEs, many in the process of catching up through “springboard” FDI with developed-market MNEs (DMNEs), are more sensitive to IPR protection than DMNEs. Results of logistic regression modelling of 112,908 greenfield projects largely support our hypotheses. We discuss implications for understanding EMNE theorizing and policy, which has to date focused more on regulating technology-seeking mergers and acquisitions (M&As), overlooking the growing importance of R&D-related greenfield FDI as an effective firm-level catch-up strategy for EMNEs.