Intellectual property rights protection and technological innovation: The moderating effect of internationalization

Purpose: The purpose of this paper is to assess the role of firms’ internationalization on the relationship between intellectual property right (IPR) protection and their technological innovation. While recent studies provide a negative relationship between IPR protection and technological innovation, this paper argues that firm’s internationalization weaken the negative relationship. This research is a meaningful step to clarify the theoretical conflict and empirical ambiguity of the effect of IPR protection on technological innovations. Design/methodology/approach: This paper empirically analyzes the theoretical arguments with 204 US firms, which registered their patents in the United States Patent and Trademark Office and have been listed in the Compustat database between 2007 and 2010. Findings: The paper suggests that IPR protections brings more benefit to firms with high multinationality and are more export-oriented in terms of developing technological innovation, whereas the effects of international knowledge stock is unclear in the relationship between IPR protection and technological innovation. Research limitations/implications: This study shows the effects of internationalization factors, which provide the benefits of cost efficiency and of more resource accessibility on the relationship between IPR protection regime and a firm’s technological innovation. The implication for policy makers and firm managers is that utilizing internationalization resources and capabilities is essential in developing their firms’ technological innovation under a strong IPR protection. Originality/value: This paper enriches the literature of IPRs and offers the direction for future research on how a firm’s internationalization matters in its innovative activities under IPR protection.