What do we know about the impact of intellectual property rights on the foreign direct investment location (country) choice? A review and research agenda

Research output: Contribution to journalArticle

Abstract

Despite a longstanding debate, at both a theoretical and empirical level, research on the relationship between foreign direct investment (FDI) and intellectual property rights (IPRs) remains scant and ambiguous. As a result, the link between IPR strength and multinational enterprises’ (MNEs) propensity to invest is unproven and seemingly dependent on a number of factors. We critically review the theory and evidence of the influence of IPRs on FDI and MNEs’ investment location (country) decisions both to ‘take stock’ of existing knowledge of this relationship and, by identifying gaps in, and shortcomings of prior work, develop a fruitful research agenda. We find that existing empirical work on the IPR-FDI nexus, though skewed in favour of a positive relationship between IPR protection and FDI, is fragmented, inconclusive and unable to square the conflicting theoretical predictions on how the strength of IPRs can affect MNEs’ FDI location decisions. Several issues and challenges are highlighted to explain the difficulties of the collective body of past empirical work to provide a definite answer to the question of the impact of IPRs on FDI, from which valuable recommendations are proposed to guide future applied research.
LanguageEnglish
Pages665-688
Number of pages24
JournalJournal of Economic Surveys
Volume33
Issue number2
Early online date5 Dec 2018
DOIs
Publication statusPublished - 1 Apr 2019

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Foreign direct investment
Intellectual property rights
Research agenda
Multinational enterprises
Location decision
Propensity
Intellectual property rights protection
Prediction
Factors
Applied research

Bibliographical note

This is the peer reviewed version of the following article: Noon, P, De Vita, G & Appleyard, L 2019, 'What do we know about the impact of intellectual property rights on the foreign direct investment location (country) choice? A review and research agenda' Journal of Economic Surveys, vol. 33, no. 2, pp. 655-688., which has been published in final form at https://dx.doi.org/10.1111/joes.12292. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.

Copyright © and Moral Rights are retained by the author(s) and/ or other copyright owners. A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. This item cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder(s). The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders.

Keywords

  • Foreign Direct Investment
  • Intellectual property rights
  • Multinational enterprises
  • Investment location choice
  • Critical literature review

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)
  • Business, Management and Accounting(all)

Cite this

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title = "What do we know about the impact of intellectual property rights on the foreign direct investment location (country) choice? A review and research agenda",
abstract = "Despite a longstanding debate, at both a theoretical and empirical level, research on the relationship between foreign direct investment (FDI) and intellectual property rights (IPRs) remains scant and ambiguous. As a result, the link between IPR strength and multinational enterprises’ (MNEs) propensity to invest is unproven and seemingly dependent on a number of factors. We critically review the theory and evidence of the influence of IPRs on FDI and MNEs’ investment location (country) decisions both to ‘take stock’ of existing knowledge of this relationship and, by identifying gaps in, and shortcomings of prior work, develop a fruitful research agenda. We find that existing empirical work on the IPR-FDI nexus, though skewed in favour of a positive relationship between IPR protection and FDI, is fragmented, inconclusive and unable to square the conflicting theoretical predictions on how the strength of IPRs can affect MNEs’ FDI location decisions. Several issues and challenges are highlighted to explain the difficulties of the collective body of past empirical work to provide a definite answer to the question of the impact of IPRs on FDI, from which valuable recommendations are proposed to guide future applied research.",
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