Patently different? Strength of patents and nature of R&D offshoring activity

Despite concerns of leakage of Intellectual Property (IP), multinational firms are increasingly offshoring R&D activity to developing countries with weak Intellectual Property Regimes (IPRs). This paper examines how the strength of the IPR at an offshore location influences the nature of multinational R&D activities in that location. It aims to contribute to a better understanding of multinationals R&D strategies in offshore locations. 

The paper argues that, on average, the weaker the IPR at the offshore location, multinational firms are less likely to perform from that location R&D projects that are (a) valuable to its competitors and (b) builds on the firm’s prior knowledge. The paper also argues that in offshore locations with weak IPRs, this type of project selection is even more likely when the R&D project is aimed at the offshore market than when it is aimed at the firm’s headquarters location.