Index of Patent Systems Strength

The effect of patent enforcement on international acquisitions by firms from BRICS countries in Europe.

The international acquisition activities of multinationals from emerging markets are affected by the strength of the IP systems of the host market.

The last two decades have witnessed an increasing number of cross border acquisitions by emerging market multinational enterprises (EMNEs), particularly from large emerging economies such as Brazil, Russia, India, China and South Africa (BRICS).

This article studies the effect of IP systems’ strength on EMNE preferences for partial or full acquisitions in European countries. There are currently no empirical investigations into the effect of the strength of IP systems on international acquisitions. Given the growing importance of IP systems internationally over the last two decades, it is important to gain a better understanding about the way that IP systems with different levels of strength affect the international acquisition activities of EMNEs from BRICS countries.

  • Our study has useful implications for the managers of MNEs from BRICS economies aspiring to enter the European market by acquiring a local firm.
  • We find that strong IP systems in target countries are more likely to drive BRICS MNEs to choose full over partial acquisitions.
  • EMNEs have a strong incentive to fully acquire firms operating in countries with strong IP systems, because the full acquisition of investments in R&D is expected to achieve effective enforceability, and reach higher appropriability value.
  • However, we also find that if the target firms have high R&D capabilities, and are based in a country with a strong IP system, then BRICS MNEs are more likely to pursue a partial acquisition mode.

The published version of the full article can be accessed here.

Back to: Management School