Intellectual property regimes and knowledge governance in MNEs: Expatriate staffing and R&D-manufacturing colocation

Abstract

Expatriates can provide multinational enterprises (MNEs) with an effective knowledge governance mechanism to buffer institutional deficiencies or maximize institutional benefits associated with varying intellectual property (IP) regimes. Building on the implications of both transaction cost minimization and value maximization through expatriate utilization, this study explores how MNEs adjust their use of expatriates in manufacturing subsidiaries contingent on host country IP regimes. The study also examines how R&D-manufacturing colocation and the parent firm’s technological competence moderate the relationship between host country IP regimes and expatriate utilization. Using a global dataset of South Korean MNEs, this paper finds support for a U-curve relationship between the strength of host country IP regimes and the MNE’s expatriate staffing levels in manufacturing subsidiaries. The results also reveal that the U-shape relationship is strengthened by R&D-manufacturing colocation but weakened by the parent firm’s R&D intensity. These findings provide important implications for research and practice pertaining to MNE management in different IP regimes in general and expatriate utilization in particular.