Abstract:

We integrate international business theory on foreign direct investment (FDI) with institutional theory on intellectual property rights (IPR) to explain characteristics and behaviour of foreign investment subsidiaries in Central East Europe, a region with an IPR regime–gap vis–à–vis West European countries. Starting from the premise that FDI plays a crucial role for technological catch–up development in Central East Europe via technology and knowledge transfer, we assess the role played by the IPR regimes in a selection of CEE countries as a factor for corporate governance and control of foreign invested subsidiaries, for their own technological activity, their trade relationships, and networking partners for technological activity. As a specific novelty to the literature, we assess the influence of the strength of IPR regimes on corporate control of subsidiaries and conclude that IPR–sensitive foreign investments tend to have lower functional autonomy, tend to cooperate more intensively within their transnational network and yet are still technologically more active than less IPR–sensitive subsidiaries.

Keywords: Foreign Direct Investment, Intellectual Property Rights, Technology Transfer, Corporate Governance and Control, R&D and Innovation