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Intellectual Property Rights, Product Complexity, and the Organization

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Listed:
  • Alireza Naghavi
  • Julia Spies
  • Farid Toubal

Abstract

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 from 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.

Suggested Citation

  • Alireza Naghavi & Julia Spies & Farid Toubal, 2014. "Intellectual Property Rights, Product Complexity, and the Organization," Working Papers 2014-07, CEPII research center.
  • Handle: RePEc:cii:cepidt:2014-07
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    Cited by:

    1. repec:bla:reviec:v:25:y:2017:i:3:p:626-648 is not listed on IDEAS
    2. Keishun Suzuki, 2015. "Economic growth under two forms of intellectual property rights protection: patents and trade secrets," Journal of Economics, Springer, pages 49-71.
    3. Alireza Naghavi & Shin-Kun Peng & Yingyi Tsai, 2017. "Relationship-specific Investments and Intellectual Property Rights Enforcement with Heterogeneous Suppliers," Review of International Economics, Wiley Blackwell, pages 626-648.
    4. Fernandez Donoso, Jose, 2014. "Do complex inventions need less international patent protection?," Economics Letters, Elsevier, vol. 125(2), pages 278-281.

    More about this item

    Keywords

    Outsourcing; Product complexity; Intellectual Property Rights; Technology Sharing;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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