Hierarchical Segmentation of R&D Process and Intellectual Property Protection: Evidence From Multinational R&D Laboratories in China

This paper examines how multinational corporations (MNCs) protect their intellectual property (IP) when they conduct R&D in countries with weak IP rights (IPRs) protection. Findings from a small-scale survey and three case studies in China show that hierarchical segmentation of the R&D process can provide an effective way for IPR protection. Furthermore, a modular R&D structure adopted by many information technology companies can facilitate the hierarchical segmentation. Because R&D is becoming distributed across locations with varying levels of IPR protection, a center-peripheral R&D organizational structure is emerging within MNCs as R&D globalization proceeds.