2022 Annual Conference – Protecting Intellectual Property and Appropriating Value from Innovations in Weak Appropriability Regimes

How can multinational corporations (MNCs) protect their intellectual property (IP) when patents are weakly enforced? We focus on an innovator’s direct competitive response to local imitators, rather than an indirect response through the country’s legal system. An imitator will only take action to appropriate the innovator’s value if the imitator has the financial motivation, opportunity, and ability to copy and commercialize the innovator’s product/service. If the innovator can decrease one of these conditions to a level that demotivates or inhibits the imitator from taking action, the innovator will have protected its IP. In this article, we introduce the constructs barrier to imitation and barrier to commercialization, two separate hurdles that can block imitators appropriation of MNC rents. We prescribe MNC IP strategies contingent on country characteristics, local imitator capabilities, the MNC’s barriers to imitation and commercialization, and the value chain activities the MNC desires to locate in the country of interest.