The Influence of Political Capabilities and Diplomatic Relations on Innovation Offshoring

Omar El Nayal, Joao Albino Pimentel, Pierre Dussauge

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Firms can derive significant benefits from locating innovation activities in foreign countries. Yet, such offshoring of innovation activities comes with notable downsides, particularly the risk of innovation misappropriation in host countries with weak intellectual property rights (IPR) regimes. Although prior research has focused on how firms attempt to manage this downside risk through innovation-specific remedies and knowledge protection strategies, the role of firm nonmarket capabilities, notably political capabilities, has thus far been largely overlooked. We argue that firm political capabilities can help protect firms from the possible misappropriation of their intangible resources in weak IPR regimes, but that this effect will only materialize when a firm’s home and host countries maintain favorable diplomatic relationships. Our theorizing thus considers multiple levels of political influence that affect a firm’s ability to overcome the risks associated with weak IPR regimes. We find support for our predictions in a sample of 479 innovation offshoring investments made by 102 firms from 12 home countries over the period 2003-2010."
Original languageEnglish
Title of host publicationProceedings of the Eightieth Annual Meeting of the Academy of Management
EditorsGuclu Atinc
Number of pages1
Place of PublicationBriarcliff Manor, NY
PublisherAcademy of Management
Publication date2020
Publication statusPublished - 2020
EventThe Academy of Management Annual Meeting 2020: Broadening Our Sight - Virtual
Duration: 7 Aug 202011 Aug 2020
Conference number: 80


ConferenceThe Academy of Management Annual Meeting 2020
Internet address
SeriesAcademy of Management Proceedings

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