Intellectual Property Rights and Entry into a Foreign Market: FDI vs. Joint Ventures
Alireza Naghavi, Dermot Leahy
Joint Ventures,Intellectual Property Rights,Technology Transfer,R&D Spillovers,FDI Policy
Economy and Society
Gianmarco I.P. Ottaviano
We study the effect of the intellectual property rights (IPR) regime of a host country (South) on a multinational’s decision between serving a market via greenfield foreign direct investment to avoid the exposure of its technology or entering a joint venture (JV) with a local firm, which allows R&D spillovers under imperfect IPRs. JV is the equilibrium market structure when R&D intensity is moderate and IPRs strong. The South can gain from increased IPR protection by encouraging a JV, whereas policies to limit foreign ownership in a JV gain importance in technology intensive industries as complementary policies to strong IPRs.