Intellectual property rights and the governance of international R&D partnerships
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Intellectual property rights and the governance of international R&D partnerships John Hagedoorn, Danielle Cloodt and Hans van Kranenburg MERIT and Department of Organization and Strategy, Faculty of Economics and Business Administration, Maastricht University, The Netherlands Correspondence: Dr J Hagedoorn, MERIT and Department of Organization and Strategy, Faculty of Economics and Business Administration, Maastricht University, PO Box 616, 6200 MD Maastricht, The Netherlands. Tel: þ 31 43 3883823; Fax: þ 31 43 3884893; E-mail: [email protected]
Received: 26 February 2003 Revised: 18 August 2004 Accepted: 30 August 2004 Online publication date: 9 December 2004
Abstract This paper studies the degree to which country differences in intellectual property rights protection affect the choice of companies for a particular mode of international inter-firm R&D partnering. It focuses on the preference of companies for either an equity joint venture or a contractual partnership. We find that international differences in intellectual property rights protection are a significant factor: with less secure protection, firms choose R&D joint ventures rather than contractual partnerships. The level of technological change in industries has an inverse effect on the preference for international R&D joint ventures. Journal of International Business Studies (2005) 36, 175–186. doi:10.1057/palgrave.jibs.8400122 Keywords: international partnerships; intellectual property rights protection; R&D
Introduction This paper studies the effect of different regimes of intellectual property rights protection on the preference of companies for particular forms of international inter-firm R&D partnership. It particularly looks at the choice for either equity-based international R&D joint ventures or contractual international R&D partnerships. In this context, we shall pay attention to a number of specific issues that refer to the international differences in intellectual property rights protection and the role that technological change might play in all of this. This contribution builds on a small number of previous studies, such as Pisano (1989) and Oxley (1999). Pisano’s (1989) study was considering mainly intellectual property rights protection and the preference for particular forms of inter-firm partnership in the US biotechnology industry. His study suggests that companies prefer equity-based partnerships to contractual agreements when they are confronted with higher levels of specific knowledge transfer, when uncertainty surrounding partnerships increases, and when smallnumber bargaining conditions create risk. Oxley’s (1999) seminal study on a somewhat similar set of questions presented an analysis of the choice between equity and contractual partnerships from the perspective of US companies within a limited number of hightech sectors. Her study indicates that in international partnerships established during the 1980s both the nature of the actual tra
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