Host Country Contingencies on Knowledge Protection Strategies of Multinational Firms – Bring a Knife to a Gunfight?

28 Pages Posted: 23 Apr 2009

See all articles by Edlira Shehu

Edlira Shehu

Copenhagen Business School

Wolfgang Sofka

Tilburg University; CentER; CIR

Date Written: 2009


International knowledge spillovers, especially through multinational companies (MNCs), have recently been a major topic of the academic and management discussion. However, most studies treat MNC subsidiaries as relatively passive actors without clear knowledge protection strategies. The goal of this study is to extend this stream of research by investigating both market-based (e.g. secrecy, lead time) as well as legal knowledge protection strategies (e.g. patents, trademarks) of MNC subsidiaries. We argue that these strategies are not independent from the opportunities and challenges of the host country. We suggest that the host country leadership status influences the choice of knowledge protection strategies along two major dimensions: geographical and industry strength of host country firms. We test our hypotheses for a broad sample of more than 1,500 firms in Germany. The results indicate that legal forms of knowledge protection are used more restrictively if the host country geographical environment is technologically leading while technological leadership of host country competitors within the industry leads to less restrictive market-based knowledge protection strategies. We develop management recommendations based on these trade-offs between reliable knowledge protection and the need for reciprocity in exchanging knowledge.

Keywords: Knowledge protection, Multinational Companies, Patenting

JEL Classification: F23, O31, O32, D8

Suggested Citation

Shehu, Edlira and Sofka, Wolfgang, Host Country Contingencies on Knowledge Protection Strategies of Multinational Firms – Bring a Knife to a Gunfight? (2009). ZEW - Centre for European Economic Research Discussion Paper No. 09-002, Available at SSRN: or

Edlira Shehu

Copenhagen Business School ( email )


Wolfgang Sofka (Contact Author)

Tilburg University ( email )


CentER ( email )

P.O. Box 90153
Tilburg, 5000 LE

CIR ( email )

Warandelaan 2
Tilburg, 5000 LE

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