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“Doing R&D in Countries with Weak IPR Protection”

“Doing R&D in Countries with Weak IPR Protection”. By Minyuan Zhao Comments by David Hsu, Wharton. Paper summary & importance. Hypotheses Technologies developed in weak IPR countries are used more internally than those developed in other foreign countries

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“Doing R&D in Countries with Weak IPR Protection”

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  1. “Doing R&D in Countries with Weak IPR Protection” By Minyuan Zhao Comments by David Hsu, Wharton

  2. Paper summary & importance • Hypotheses • Technologies developed in weak IPR countries are used more internally than those developed in other foreign countries • Firms doing R&D in weak IPR countries feature stronger linkages than those who do not • Important issues investigated • Firm level action given institutional IPR environments • Arbitrage opportunity available only to certain firms

  3. Different motivations for entry? • Strong IPR environments associated with “knowledge clusters” & greater availability of (local) knowledge spillovers, leading to “home base augmenting” R&D labs • More diverse knowledge base & fewer self citations • May want to do R&D in weaker IPR environments if geographically proximate to large local markets and/or manufacturing, leading to “home base exploiting” R&D labs • Still may be patentable innovations • Fewer local knowledge spillovers & more self citations • These explanations do not rely on internal organizational linkages

  4. Internal linkage & self-citations • Self-cites could also proxy for speed of exploitation, which is a different appropriation mode (though not mutually exclusive with formal IPR protection) • A different interpretation than tight internal linkage • Internal organizational linkages or complexity of technical development (even within technology class)? • Specialized knowledge of technical development (captured in Lambda?) may account for observed pattern of self cites • Project-level vs. firm-level variation in technological complexity? • But natural upper bound on technological complexity due to international R&D collaboration (codifiable knowledge that can be “chunked” and reassembled) • Self citation may be one dimension of internal linkage; citations in a given technical domain may be another important dimension

  5. Source: Rosenkopf and Nerkar (2001)

  6. Source: Trajtenberg (2001)

  7. Source: Trajtenberg (2001)

  8. Some issues • Show descriptive statistics of geographic locus of innovation in weak IPR countries • Unpack WEAK by including country dummy variables in multivariate analyses? • Are the results robust to alternate definitions of patent assignment to weak IPR country? • Weight first (and last?) inventors more? • Occurrence of “pure” cases: all inventors from weak IPR countries? • Would be helpful to unpack the control variables (Lambdas) in the text and tables • Show robustness to different groups of controls • Show importance of patents (forward citations) developed under different IPR regimes relative to the relevant time-technology cohort • To give a sense of the relative importance of internalization arbitrage • Hard to separate expropriation risk in weak IPR countries from political & regulatory risks • Implications for risk management are different • Bases for arbitrage different

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