Multinationals, innovation, and institutional context: IPR protection and distance effects

Abstract We characterize the knowledge production process whereby inventive capabilities of firm generate innovation output in highly multinational enterprises (MNEs). explore sensitivity this relationship to strength intellectual property rights (IPR) protection across MNEs R&D subsidiaries. argue that MNE innovative performance will be enhanced when firm’s activities are based locations where IPR is stronger. Moreover, considering internal geography activities, depends on distance between home- and host-country regime. Thus, worse, as difference home host regimes increases. Finally, we asymmetries relationship, particular deterioration more marked locate their economies with significantly less strict than country. test these ideas using a unique new dataset about most world, an unbalanced panel around 900 observed for period 2004 2013 find strong support all our hypotheses.