Intellectual Property Rights, Product Complexity, and the Organization of Multinational Firms

Naghavi , Alireza ; Spies , Julia ; Toubal , Farid (2013) Intellectual Property Rights, Product Complexity, and the Organization of Multinational Firms. Bologna: Dipartimento di Scienze economiche DSE, p. 34. DOI 10.6092/unibo/amsacta/4466. In: Quaderni - Working Paper DSE (773). ISSN 2282-6483.
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This paper studies how the Intellectual Property Right (IPR) regime in destination countries influences the way multinationals structure the international organization of their production. In particular, we explore how multinationals divide tasks of different complexities across countries with different levels of IPR protection. The analysis studies the decision of firms between procurement from related parties and outsourcing to independents suppliers at the product level. It also breaks down outsourcing into two types by distinguishing whether or not they involve technology sharing between the two parties. We combine data from a French firm-level survey on the mode choice for each transaction with a newly developed complexity measure at the product level. Our results confirm that firms are generally reluctant to source highly complex goods from outside firm boundaries. By studying the interaction between product complexity and the IPR protection, we obtain that (i) for technology-sharing-outsourcing IPRs promote outsourcing of more complex goods to a destination country by guaranteeing the protection of their technology, (ii) for non-technology-related-outsourcing IPRs attract the outsourcing of less complex products that are more prone to reverse engineering and simpler to decodify and imitate.

Document type
Monograph (Working Paper)
Naghavi , Alireza
Spies , Julia
Toubal , Farid
Outsourcing, product complexity, intellectual property rights, technology sharing
Deposit date
26 Jan 2016 11:16
Last modified
26 Jan 2016 11:16

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