Offshore Outsourcing, Contractual R&D and Intellectual Property in Developing Countries

Marjit, Sugata and Xu, Xinpeng and Yang, Lei (2009): Offshore Outsourcing, Contractual R&D and Intellectual Property in Developing Countries.

Abstract

This paper examines the role of intellectual property in developing countries in offshore outsourcing of R&D. We find that strengthened intellectual property protection in developing countries provides incentive for firms, both multinational and local, to specialize in undertaking an R&D activity in which it has competitive advantage (the specialization effect). It also facilitates the process for local firms to switch from imitators to potential innovators (the switching effect). We demonstrate that the multinational firm's strategic behavior on IPR enforcement can be used as an effective instrument to subsidize contractual research and development in developing countries (the subsidizing effect). We further illustrate how a policy mix of IPR and FDI subsidy in developing countries affects R&D activities adding an offshore R&D subsidiary as an additional organizational form.

• Item Type: MPRA Paper
• Language: English
• Keywords: Intellectual Property Rights; Contractual R&D; R&D Chain
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O34 - Intellectual Property and Intellectual Capital; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade

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