IDEAS home Printed from https://ideas.repec.org/a/pal/jintbs/v51y2020i6d10.1057_s41267-019-00284-y.html
   My bibliography  Save this article

Internationalizing firm innovations: The influence of multimarket overlap in knowledge activities

Author

Listed:
  • Heather Berry

    (George Washington University)

Abstract

Building on insights from the multimarket competition and knowledge management literatures, this paper explores how multimarket overlap in knowledge activities influences firm decisions to internationalize their home-country generated innovations. I argue that higher multimarket overlap in knowledge activities with industry rivals pushes firms to internationalize and protect their innovations. At the same time, I argue that this strategic response will be attenuated for higher value firm innovations and in industries with higher global knowledge concentration across countries. Empirical results from a comprehensive panel of US MNCs and their worldwide family patents provide support for these arguments. While a higher overlap in knowledge activities with home and foreign rivals pushes firms to internationalize their innovations, this main strategic response is attenuated for higher value firm innovations and when industry knowledge is concentrated in fewer countries. Taken together, this paper extends the knowledge management literature by exploring how knowledge threats from home and foreign rivals impact the decisions of firms to transfer their innovations to foreign countries, while at the same time expanding the multimarket competition literature by offering new ways of identifying credible knowledge threats by rivals.

Suggested Citation

  • Heather Berry, 2020. "Internationalizing firm innovations: The influence of multimarket overlap in knowledge activities," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(6), pages 963-985, August.
    • Handle: RePEc:pal:jintbs:v:51:y:2020:i:6:d:10.1057_s41267-019-00284-y
    DOI: 10.1057/s41267-019-00284-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41267-019-00284-y
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/s41267-019-00284-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. L. Kamran Bilir, 2014. "Patent Laws, Product Life-Cycle Lengths, and Multinational Activity," American Economic Review, American Economic Association, vol. 104(7), pages 1979-2013, July.
    2. Javier Gimeno, 1999. "Reciprocal threats in multimarket rivalry: staking out ‘spheres of influence’ in the U.S. airline industry," Strategic Management Journal, Wiley Blackwell, vol. 20(2), pages 101-128, February.
    3. Ekaterina Turkina & Ari Van Assche, 2018. "Global connectedness and local innovation in industrial clusters," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(6), pages 706-728, August.
    4. Fosfuri, Andrea & Motta, Massimo & Ronde, Thomas, 2001. "Foreign direct investment and spillovers through workers' mobility," Journal of International Economics, Elsevier, vol. 53(1), pages 205-222, February.
    5. Thomas Hutzschenreuter & Florian Gröne, 2009. "Product and geographic scope changes of multinational enterprises in response to international competition," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(7), pages 1149-1170, September.
    6. Magnus Blomström & Ari Kokko & Mario Zejan, 2000. "Multinational Corporations and Spillovers," Palgrave Macmillan Books, in: Foreign Direct Investment, chapter 8, pages 101-133, Palgrave Macmillan.
    7. Manuel Trajtenberg, 1990. "A Penny for Your Quotes: Patent Citations and the Value of Innovations," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 172-187, Spring.
    8. J. Myles Shaver & Fredrick Flyer, 2000. "Agglomeration economies, firm heterogeneity, and foreign direct investment in the United States," Strategic Management Journal, Wiley Blackwell, vol. 21(12), pages 1175-1193, December.
    9. Paul Almeida & Jaeyong Song & Robert M. Grant, 2002. "Are Firms Superior to Alliances and Markets? An Empirical Test of Cross-Border Knowledge Building," Organization Science, INFORMS, vol. 13(2), pages 147-161, April.
    10. Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
    11. Kogut, Bruce & Chang, Sea Jin, 1991. "Technological Capabilities and Japanese Foreign Direct Investment in the United States," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 401-413, August.
    12. Minyuan Zhao, 2006. "Conducting R& D in Countries with Weak Intellectual Property Rights Protection," Management Science, INFORMS, vol. 52(8), pages 1185-1199, August.
    13. Bronwyn H. Hall & Adam Jaffe & Manuel Trajtenberg, 2005. "Market Value and Patent Citations," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 16-38, Spring.
    14. Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 577-598.
    15. Robert Jensen & Gabriel Szulanski, 2004. "Stickiness and the adaptation of organizational practices in cross-border knowledge transfers," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(6), pages 508-523, November.
    16. Gilles Duranton & Henry G. Overman, 2005. "Testing for Localization Using Micro-Geographic Data," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(4), pages 1077-1106.
    17. Peter J. Buckley & Mark Casson, 1991. "The Future of the Multinational Enterprise," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-1-349-21204-0.
    18. Dixit, Avinash, 1980. "The Role of Investment in Entry-Deterrence," Economic Journal, Royal Economic Society, vol. 90(357), pages 95-106, March.
    19. Leonid Kogan & Dimitris Papanikolaou & Amit Seru & Noah Stoffman, 2017. "Technological Innovation, Resource Allocation, and Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(2), pages 665-712.
    20. Anil K. Gupta & Vijay Govindarajan, 2000. "Knowledge flows within multinational corporations," Strategic Management Journal, Wiley Blackwell, vol. 21(4), pages 473-496, April.
    21. Audretsch, David B & Feldman, Maryann P, 1996. "R&D Spillovers and the Geography of Innovation and Production," American Economic Review, American Economic Association, vol. 86(3), pages 630-640, June.
    22. Henrich R. Greve, 2008. "Multimarket contact and sales growth: evidence from insurance," Strategic Management Journal, Wiley Blackwell, vol. 29(3), pages 229-249, March.
    23. Juan Alcácer & Mercedes Delgado, 2016. "Spatial Organization of Firms and Location Choices Through the Value Chain," Management Science, INFORMS, vol. 62(11), pages 3213-3234, November.
    24. Ming-Jer Chen & Ken G. Smith & Curtis M. Grimm, 1992. "Action Characteristics as Predictors of Competitive Responses," Management Science, INFORMS, vol. 38(3), pages 439-455, March.
    25. Ram Mudambi, 2008. "Location, control and innovation in knowledge-intensive industries," Journal of Economic Geography, Oxford University Press, vol. 8(5), pages 699-725, September.
    26. Christine M Chan & Shige Makino & Takehiko Isobe, 2006. "Interdependent behavior in foreign direct investment: the multi-level effects of prior entry and prior exit on foreign market entry," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(5), pages 642-665, September.
    27. Suarez, Fernando F., 2004. "Battles for technological dominance: an integrative framework," Research Policy, Elsevier, vol. 33(2), pages 271-286, March.
    28. Zanfei, Antonello, 2000. "Transnational Firms and the Changing Organisation of Innovative Activities," Cambridge Journal of Economics, Oxford University Press, vol. 24(5), pages 515-542, September.
    29. Furman, Jeffrey L. & Porter, Michael E. & Stern, Scott, 2002. "The determinants of national innovative capacity," Research Policy, Elsevier, vol. 31(6), pages 899-933, August.
    30. Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June.
    31. Susan E. Feinberg & Anil K. Gupta, 2004. "Knowledge spillovers and the assignment of R&D responsibilities to foreign subsidiaries," Strategic Management Journal, Wiley Blackwell, vol. 25(8‐9), pages 823-845, August.
    32. Gautam Ahuja & Curba Morris Lampert, 2001. "Entrepreneurship in the large corporation: a longitudinal study of how established firms create breakthrough inventions," Strategic Management Journal, Wiley Blackwell, vol. 22(6‐7), pages 521-543, June.
    33. Heather Berry, 2017. "Managing valuable knowledge in weak IP protection countries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(7), pages 787-807, September.
    34. Kristin Brandl & Izzet Darendeli & Ram Mudambi, 2019. "Foreign actors and intellectual property protection regulations in developing countries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(5), pages 826-846, July.
    35. Kenneth G Huang & Jiatao Li, 2019. "Adopting knowledge from reverse innovations? Transnational patents and signaling from an emerging economy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(7), pages 1078-1102, September.
    36. Jean‐Francois Hennart & Young‐Ryeol Park, 1994. "Location, governance, and strategic determinants of japanese manufacturing investment in the united states," Strategic Management Journal, Wiley Blackwell, vol. 15(6), pages 419-436, July.
    37. Dietmar Harhoff & Francis Narin & F. M. Scherer & Katrin Vopel, 1999. "Citation Frequency And The Value Of Patented Inventions," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 511-515, August.
    38. Deepak Somaya, 2003. "Strategic determinants of decisions not to settle patent litigation," Strategic Management Journal, Wiley Blackwell, vol. 24(1), pages 17-38, January.
    39. Edward Brown Flowers, 1976. "Oligopolistic Reactions in European and Canadian Direct Investment in the United States," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 7(2), pages 43-56, June.
    40. Lee G. Branstetter & Raymond Fisman & C. Fritz Foley, 2006. "Do Stronger Intellectual Property Rights Increase International Technology Transfer? Empirical Evidence from U. S. Firm-Level Panel Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(1), pages 321-349.
    41. Blomstrom, Magnus & Kokko, Ari, 1998. "Multinational Corporations and Spillovers," Journal of Economic Surveys, Wiley Blackwell, vol. 12(3), pages 247-277, July.
    42. Ekaterina Turkina & Ari Van Assche, 2018. "Global Connectedness and Local Innovation in Industrial Clusters," CIRANO Working Papers 2018s-12, CIRANO.
    43. Chwo-Ming J Yu & Kiyohiko Ito, 1988. "Oligopolistic Reaction and Foreign Direct Investment: The Case of the U.S. Tire and Textiles Industries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(3), pages 449-460, September.
    44. Juan Alcácer, 2006. "Location Choices Across the Value Chain: How Activity and Capability Influence Collocation," Management Science, INFORMS, vol. 52(10), pages 1457-1471, October.
    45. Ming‐Jer Chen & Danny Miller, 1994. "Competitive attack, retaliation and performance: An expectancy‐valence framework," Strategic Management Journal, Wiley Blackwell, vol. 15(2), pages 85-102, February.
    46. Jasjit Singh, 2007. "Asymmetry of knowledge spillovers between MNCs and host country firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(5), pages 764-786, September.
    47. Zucker, Lynne G & Darby, Michael R & Brewer, Marilynn B, 1998. "Intellectual Human Capital and the Birth of U.S. Biotechnology Enterprises," American Economic Review, American Economic Association, vol. 88(1), pages 290-306, March.
    48. Audretsch, David B & Stephan, Paula E, 1996. "Company-Scientist Locational Links: The Case of Biotechnology," American Economic Review, American Economic Association, vol. 86(3), pages 641-652, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yan Yan & Jiatao Li & Jingjing Zhang, 2022. "Protecting intellectual property in foreign subsidiaries: An internal network defense perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(9), pages 1924-1944, December.
    2. Jelena Cerar & Phillip C. Nell & B. Sebastian Reiche, 2021. "The declining share of primary data and the neglect of the individual level in international business research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(7), pages 1365-1374, September.
    3. Zhong, Xi & Chen, Weihong & Ren, Ge, 2022. "The effects of performance shortfalls on firms’ exploitation and exploration R&D internationalization decisions: Does industry environmental matter?," Technovation, Elsevier, vol. 112(C).
    4. Heather Berry, 2023. "Diverse knowledge exploration and diffusion in MNCs," Strategic Management Journal, Wiley Blackwell, vol. 44(7), pages 1589-1615, July.
    5. Zhong, Xi & Ren, Ge, 2023. "Independent and joint effects of CSR and CSI on the effectiveness of digital transformation for transition economy firms," Journal of Business Research, Elsevier, vol. 156(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Heather Berry, 2017. "Managing valuable knowledge in weak IP protection countries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(7), pages 787-807, September.
    2. Singh, Jasjit, 2008. "Distributed R&D, cross-regional knowledge integration and quality of innovative output," Research Policy, Elsevier, vol. 37(1), pages 77-96, February.
    3. Blomkvist, Katarina & Kappen, Philip & Zander, Ivo, 2014. "Superstar inventors—Towards a people-centric perspective on the geography of technological renewal in the multinational corporation," Research Policy, Elsevier, vol. 43(4), pages 669-682.
    4. Marina Papanastassiou & Robert Pearce & Antonello Zanfei, 2020. "Changing perspectives on the internationalization of R&D and innovation by multinational enterprises: A review of the literature," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 623-664, June.
    5. Eunkwang Seo & Hyo Kang & Jaeyong Song, 2020. "Blending talents for innovation: Team composition for cross-border R&D collaboration within multinational corporations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(5), pages 851-885, July.
    6. Eunkwang Seo & Hyo Kang & Jaeyong Song, 0. "Blending talents for innovation: Team composition for cross-border R&D collaboration within multinational corporations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 0, pages 1-35.
    7. Zhang, Feng & Jiang, Guohua & Cantwell, John A., 2019. "Geographically Dispersed Technological Capability Building and MNC Innovative Performance: The Role of Intra-firm Flows of Newly Absorbed Knowledge," Journal of International Management, Elsevier, vol. 25(3), pages 1-1.
    8. Danchi Tan & Weichieh Su & Joseph T. Mahoney & Yasemin Kor, 2020. "A review of research on the growth of multinational enterprises: A Penrosean lens," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 498-537, June.
    9. Nasirov, Shukhrat & Gokh, Irina & Filippaios, Fragkiskos, 2022. "Technological radicalness, R&D internationalization, and the moderating effect of intellectual property protection," Journal of Business Research, Elsevier, vol. 145(C), pages 215-227.
    10. Mario Kafouros & Niron Hashai & Janja Annabel Tardios & Elizabeth Yi Wang, 2022. "How do MNEs invent? An invention-based perspective of MNE profitability," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(7), pages 1420-1448, September.
    11. Claudio Giachetti & Ettore Spadafora, 2017. "Conformity or Nonconformity in Multinationality? Performance Implications for the Italian Ceramic Tile Manufacturers," Management International Review, Springer, vol. 57(5), pages 683-715, October.
    12. Hallin, Christina & Holmström Lind, Christine, 2012. "Revisiting the external impact of MNCs: An empirical study of the mechanisms behind knowledge spillovers from MNC subsidiaries," International Business Review, Elsevier, vol. 21(2), pages 167-179.
    13. Perri, Alessandra & Andersson, Ulf, 2014. "Knowledge outflows from foreign subsidiaries and the tension between knowledge creation and knowledge protection: Evidence from the semiconductor industry," International Business Review, Elsevier, vol. 23(1), pages 63-75.
    14. Abigail S. Hornstein & Minyuan Zhao, 2011. "Corporate Capital Budgeting Decisions and Information Sharing," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(4), pages 1135-1170, December.
    15. Jaideep Anand & Gerald McDermott & Ram Mudambi & Rajneesh Narula, 2021. "Innovation in and from emerging economies: New insights and lessons for international business research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(4), pages 545-559, June.
    16. Boeker, Warren & Howard, Michael D. & Basu, Sandip & Sahaym, Arvin, 2021. "Interpersonal relationships, digital technologies, and innovation in entrepreneurial ventures," Journal of Business Research, Elsevier, vol. 125(C), pages 495-507.
    17. Matthias Firgo & Peter Mayerhofer, 2015. "Wissens-Spillovers und regionale Entwicklung - welche strukturpolitische Ausrichtung optimiert des Wachstum?," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 144, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.
    18. Riccardo Crescenzi & Arnaud Dyèvre & Frank Neffke, 2022. "Innovation Catalysts: How Multinationals Reshape the Global Geography of Innovation," Economic Geography, Taylor & Francis Journals, vol. 98(3), pages 199-227, May.
    19. René Belderbos & Bart Leten & Shinya Suzuki, 2017. "Scientific research, firm heterogeneity, and foreign R&D locations of multinational firms," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(3), pages 691-711, September.
    20. Naveen Kumar Jain & Tanvi Kothari & Vikas Kumar, 2016. "Location Choice Research: Proposing New Agenda," Management International Review, Springer, vol. 56(3), pages 303-324, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:jintbs:v:51:y:2020:i:6:d:10.1057_s41267-019-00284-y. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.