Intellectual Property Institutions and innovation of emerging multinational companies

Using a panel data of Chinese firms’ internationalization activities, we assess whether intellectual property (IP) institutions in a host country benefits or impedes innovation of emerging multinational companies (EMNCs). We show that IP institutions in a host country enable an EMNC to obtain critical technologies for innovation, and moderate IP institutions are optimal levels for innovation development in this context. Moreover, the efficiency of EMNCs in benefiting from IP institutions for innovation increases when EMNCs develop strong absorptive capacity. Our findings integrate institutional logics, which views institutional environment as the key factor for innovation, and the resource-based view, which notes that firm-specific capabilities have critical influences on firm performance and competitive advantage. We discuss the implications of these findings on institutional environments and firm innovation research in
emerging economies.