Patently different? The influence of offshore patent strength on the nature of R&D offshoring

By Anand Nandkumar
Academy of Management | November 2017

DOI

doi.org/10.5465/ambpp.2015.14270abstract

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Nandkumar, Anand. Patently different? The influence of offshore patent strength on the nature of R&D offshoring Academy of Management doi.org/10.5465/ambpp.2015.14270abstract.

Academy of Management, 2017

Abstract

Despite concerns of leakage of Intellectual Property (IP), multinational firms are increasingly offshoring research and development activity to developing countries with weak Intellectual Property Regimes (IPRs). This paper examines how the strength of the IPR at an offshore location influences the nature of multinational R&D activities in that location. We argue that, on average, the weaker the IPR at the offshore location, multinational firms are more likely choose to perform in that host location R&D projects that are more valuable to the firm than to its competitors and are less likely to build on the firm’s prior knowledge. We also argue that in offshore locations with weak IPRs, this type of project selection is even more likely when the R&D project is aimed at the offshore market and is less likely when the project is aimed at the firm’s headquarters location. We test our theory using a novel dataset of patents assigned to US multinationals that were partially or fully offshored to India or to the UK, and were filed in the US or at the offshore location (India or UK). We thus contribute to a better understanding of multinationals R&D strategies in offshore locations.

Anand Nandkumar is an Associate Professor of Strategy, Executive Director of SRITNE at the Indian School of Business (ISB), and Associate Dean of the Centre for Learning and Teaching Excellence. He explores industry and firm-level phenomena that influence innovation - the generation of new ideas, and entrepreneurship - distribution and commercialisation of new ideas. His research focuses on high-technology industries such as pharmaceuticals, biotechnology, and software, and it falls in between industrial organisation (IO), economics of technological change, and strategy.

Professor Nandkumar’s current work in the innovation stream examines the effect of stronger intellectual property rights (IPR) on different aspects of innovation, such as the influence of stronger patents on long run incentives for innovation or the influence of stronger patents on the functioning of Markets for Technology (MFT). In the entrepreneurship stream, his current work examines the influence of venture capitalists on entrepreneurial performance.

Professor Nandkumar graduated with a PhD in Public Policy and Management, with a focus in strategy and entrepreneurship from Carnegie Mellon University in 2008. Prior to his PhD, he worked for 3 years with a startup in Silicon Valley, and prior to that, in New York City with one of the world’s largest financial services firms.

True to his expertise, at ISB, Professor Nandkumar teaches Strategic Innovation Management and Strategic Challenges for Innovation-based startups.

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