Appropriability mechanisms of multinational firms — A cross country comparison

Abstract

International knowledge spillovers, especially through multinational companies (MNC), have been a major theme of recent academic and practitioner discussion. However, relatively little is known about their capabilities for protecting valuable knowledge from spilling over to host country competitors. We extend this stream of research by investigating MNC appropriability strategies that are not limited to formal methods (patents, copyrights, trademarks) but include also strategic ones (secrecy, lead time, complex design). Hence, we conceptualize a firmpsilas breadth and depth of knowledge protection strategies and relate them to the particular situation of MNC subsidiaries. Moreover, we argue that their approaches differ with regards to host country challenges and opportunities. We test these hypotheses empirically based on a harmonized survey of more than 1,800 firms and their innovation activities in both Portugal and Germany. We find that MNCs prefer broader sets of appropriability strategies in host countries with fewer opportunities for knowledge sourcing. However, munificent environments require targeted sets of appropriability strategies instead. We suspect that this is due to a need for reciprocity in promising host country knowledge flows.