Do weak intellectual property rights regimes affect foreign multinational firms' technology exploration? The moderating role of function-related and location-related experience

Existing literature suggests that weak intellectual property rights (IPR) regimes are not conducive to innovation intensive activities. However, evidence of technology exploration activities by multinational companies (MNCs) in emerging countries challenges this view. We address this puzzle by examining how host-country IPR regimes influence MNCs' technology exploration, distinguishing between technology-seeking (TS) and home-base augmenting (HBA) activities. Drawing on organizational experience and learning theories, we also test the moderating role of MNCs' function-related (innovation function-specific and function-generic) and location-related (host country-specific and country-generic) international experience. Using PATSTAT patent data for 91 U.S. computer and electronics firms in the period 2001–2018, we find that weaker IPR protection is associated with a higher proportion of HBA initiatives. This challenges the conventional view that strong IPR regimes are indispensable for technology exploration. Moreover, we show that MNCs with extensive function-specific experience in the host and other foreign countries better navigate diverse IPR environments, making their technology exploration activities less affected by the strength of the host-country IPR regime.