This paper presents the theoretical framework and empirical analysis of the effect of stronger Intellectual Property Rights (IPRs) on technology transfer from parent firm to its subsidiaries in foreign countries. The results of empirical testing, based on the firm-level panel data of Japanese MNCs’ foreign subsidiaries, show that the stronger protection of IPRs has a positive effect on the promotion of intra-firm technology transfer after controlling for market specific factors in the host countries as well as parent-subsidiary firm specific factors. They are consistent with our theoretical prediction and the results of the previous studies based on US firm-level data.
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In case of zero value for royalty payments, we add unit value for taking natural logarithm.
The royalty payment, the R&D expenditure and the total industrial value added are deflated by the GDP deflator and expressed in the price of 1995.
Since the data we use is unbalanced panel of 2 years, the fixed effects model cannot be applied. The result of our estimation based on the balanced data does not show a different result from the estimation based on the unbalanced data. Baltagi and Chang (1994) show that estimating only balanced data extracted from unbalanced data fully loses validity. Therefore, we present only the results of estimation based on the unbalanced data.
Although it is not mentioned in the table, we have found that the Tobit estimation using panel data is more appropriate than the Tobit estimation using pooled data, according to the value of the log likelihood.
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We wish to thank Pierre Mohnen, an anonymous referee of this journal, Rene Belderbos, and the participants of the 91st International Conference of the Applied Econometrics Association on “Innovations and Intellectual Property” in Paris University and the seminars at Keio University, Kyoto University, Kanazawa University, OECD and Research Institute of Economy, Trade and Industry for their helpful comments. The authors also thank the Ministry of Economy, Trade and Industry and the Ministry of Internal Affairs and Communications for their permissions to access firm-level data
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Wakasugi, R., Ito, B. The effects of stronger intellectual property rights on technology transfer: evidence from Japanese firm-level data. J Technol Transf 34, 145–158 (2009). https://doi.org/10.1007/s10961-007-9073-8