This study examines the key drivers behind intellectual property (IP) registrations across countries, with a focus on International Intellectual Property Registration Strategies (IIPRSs).
A cross-sectional analysis was conducted using data from 98 countries to examine the net effects of IIPRS on patent, industrial design and trademark filings by both residents and non-residents. Sixteen variables sourced from international organizations were analyzed through Partial Least Squares Structural Equation Modeling (PLS-SEM).
The results indicate that the causal relationships unfold in three stages: first, a country’s business-friendly environment positively affects purchasing power and the allocation of resources to research and development (R&D); second, R&D investments drive domestic IP applications but do not motivate foreign filings; and third, consumption capacity encourages IP registrations by both locals and foreigners, with a stronger effect observed among foreign applicants.
One challenge involved compiling a reliable dataset due to variations across sources and methodological changes in the data series. Future research should adopt longitudinal approaches to capture changes over time.
The findings suggest that managers of innovative firms can make more informed decisions about where to file for IP protection, where to invest and how to balance legal protections with trade secrets. For policymakers, effectively attracting technologies and intellectual investments requires strategically balancing market potential and R&D efforts.
This study highlights how the sophistication of IIPRS reshapes the hierarchy of motivations driving foreign investments in international IP registration.
1. Introduction
The importance of intellectual property (IP) was first formally recognized in the Paris Convention for the Protection of Industrial Property in 1883. Since then, countries have developed increasingly sophisticated systems to regulate and promote the protection of creative works (WIPO, 2003). The primary purpose of IP is to safeguard the rights of innovators, rewarding their intellectual efforts and encouraging disclosure of their inventions (Belderbos, Kazimierczak, & Goedhuys, 2021). Among the various forms of IP, patents, industrial designs and trademarks are most directly linked to innovations in products, services and processes, as well as to the outcomes of research and development (R&D) (Link & Hasselt, 2020).
In recent years, however, trends such as the rise of intangible assets, (de)globalization, the ease of replication and knowledge transfer enabled by technological advances and evolving IP governance have expanded IP’s role beyond its original protective function (Belderbos et al., 2021; Sharma, Sharma, & Panda, 2021). As a result, IP registration in a particular country is now often interpreted by competitors as a strategic move – much like a chess play – signaling intent (Dechezleprêtre, Ménière, & Mohnen, 2017).
Despite efforts to harmonize procedures and legal frameworks, IP rights and enforcement still vary significantly across jurisdictions (Gimeno-Fabra & Potterie, 2020). Applicants typically choose among three levels of IP filing: national applications; regional applications through agencies such as the European Patent Office; and international filings under the Patent Cooperation Treaty, which involve greater complexity and bureaucratic requirements. Costs and processing times increase considerably with broader geographic scope, placing practical limits on international IP filings (Kafouros, Aliyev, & Krammer, 2021; Süzeroğlu-Melchiors, Gassmann, & Palmié, 2017).
Given these constraints, IP registration has increasingly become a strategic tool to maximize the return on IP portfolios, a practice known as International Intellectual Property Registration Strategy (IIPRS) (Davis, 2004; Huang & Cheng, 2015; Süzeroğlu-Melchiors et al., 2017). IIPRS may serve a variety of purposes: preventing or provoking litigation, generating licensing income, blocking or redirecting technological progress, delaying competitors’ product cycles or creating diversions and delays – often with the assistance of legal consultants (Huang, Huang, Shen, & Mao, 2021; Süzeroğlu-Melchiors et al., 2017; Huang & Chen, 2020).
Building on this understanding, a stream of literature suggests that inventors adopt international IP registration strategies based on the commercialization and licensing potential of target markets (Mosconi & D’Ingiullo, 2021; Zeebroeck & Potterie, 2011; Gimeno-Fabra & Potterie, 2020). Consequently, a country’s market potential plays a central role in attracting foreign IP filings, rivaling traditional protection concerns (Mosconi & D’Ingiullo, 2021).
This shift has been acknowledged in the International Business (IB) literature, which examines multinational corporations’ R&D activities and value chains and highlights the need for deeper investigation into IP-related phenomena. Market attractiveness is complex and multifaceted, and further research is needed to clarify how these factors influence global IP application patterns (Griffith, Cavusgil, & Xu, 2008; Naghavi, 2007; Veugelers & Houte, 1990; Carree, Piergiovanni, Santarelli, & Verheul, 2015).
While market potential is critical, protection against imitation remains a key concern for IP strategists (Süzeroğlu-Melchiors et al., 2017; Kafouros et al., 2021). A country’s ability to replicate innovations depends on its technological maturity and capacity to handle complex products (Hidalgo, Klinger, Barabasi, & Hausmann, 2007). Thus, IP’s role as a legal monopoly remains foundational (WIPO, 2003; Bruno, Crescenzi, Estrin, & Petralia, 2021).
From this perspective, inventors consider the innovation capabilities of target countries when planning IP filings. R&D intensity in a country may serve as both an attraction factor for foreign IP applications and a protective measure. The IB literature reinforces this notion, suggesting that innovation is driven by accumulated technological spin-offs (Pandya, 2016), spillovers from multinational subsidiaries (Fleury, Fleury, & Borini, 2012; Naghavi, 2007) and knowledge network effects (Oliva, 2014; Vahlne & Johanson, 2013).
In this context, this study investigates how a country’s consumption capacity, domestic R&D efforts and business environment for innovation influence IP filings by residents and non-residents. We model these relationships using structural equation modeling, examining patent, industrial design and trademark applications across 98 countries in 2015.
Our research shows that international IP registration strategies are becoming increasingly sophisticated, reshaping the motivations behind foreign filings. As a result, traditional assumptions about IP as primarily a tool for imitation protection may no longer hold in today’s dynamic environment. These insights can guide policymakers in designing strategies to attract technology and foreign investment, while helping innovation managers make more informed decisions about IP registration and how to strategically balance legal protection with trade secrecy.
2. Conceptual structure
This section presents the conceptual foundation of the study and outlines the constructs of Business Environment for Innovation, Consumption Capacity and Research and Development Effort, followed by the main research hypotheses.
2.1 Intellectual Property
The World Intellectual Property Organization (WIPO) classifies IP into two broad categories: industrial property, which includes patents, trademarks, industrial designs and geographical indications, and copyright, which primarily refers to cultural creations. While both categories involve innovation, the former is more closely associated with technological development, whereas the latter is associated with artistic works (Kemp, 2005).
This study focuses on the technological dimension of IP, specifically patents, industrial designs and trademarks: the technical solutions developed by researchers and inventors to produce and commercialize innovations (Chen & Puttitanun, 2005).
When a company or individual achieves a technological breakthrough through R&D, they can apply for a patent by disclosing the invention in detail in exchange for exclusive rights granted by a government authority for a limited period (Dechezleprêtre et al., 2017; Zeebroeck & Potterie, 2011).
If an innovator creates a novel, non-functional design for aesthetic purposes, without manufacturing utility, it may be protected through industrial design registration. This form of IP often represents the most visually innovative aspect of a product. Industrial design frequently precedes patents in traditional value chains, although it can also arise from rudimentary production processes and may not always be connected to a patent (Coelho & Corda, 2011).
Further along the value chain, when launching a product, the innovator may register a trademark: a distinctive sign used to identify goods or services. Trademarks help consumers recognize and differentiate offerings based on attributes, expectations or perceived value. They can include various sensory elements, such as symbols, scents, shapes, sounds or even flavors (Greenhalgh & Rogers, 2012; Richardson, 2008).
Several barriers may hinder IP applications, including time-consuming procedures, bureaucracy, high costs, risk of rejection and the requirement to disclose sensitive details (Gambardella, Giuri, & Luzzi, 2007). Still, patents, industrial designs and trademarks provide comparative technological advantages and can be converted into valuable financial assets through licensing or other transactions (De Marco, Scellato, Ughetto, & Caviggioli, 2017; Kani & Motohashi, 2012).
2.2 Global R&D strategy and International Intellectual Property Registration Strategy
Historically, IP’s main function has been to protect innovations from imitation, allowing firms to retain the benefits of their R&D investments. Beyond protection, IP can be strategically used to generate revenue through licensing, enable cross-licensing or influence future R&D decisions, thereby maximizing returns on a firm’s IP portfolio (Quan & Chesbrough, 2010; Süzeroğlu-Melchiors et al., 2017). For instance, Kafouros et al. (2021) show that innovators may also seek profits through patent infringement litigation.
The IIPRS addresses the challenge of balancing IP protection with the potential financial returns associated with an international IP portfolio (Davis, 2004; Huang et al., 2021; Huang & Cheng, 2015; Süzeroğlu-Melchiors et al., 2017). Multinational corporations play a key role in shaping IIPRS, particularly when relocating activities toward less-developed countries (Naghavi, 2007).
Through global value chains, multinational subsidiaries create local ecosystems that support the supply of goods and services. This facilitates knowledge diffusion and generates technological spillovers, which in turn requires more sophisticated global R&D strategies (Zhang, Jiang, Wu, & Li, 2019). Managers must adapt their IP strategies to manage collaborative innovations across countries. Tools such as non-disclosure agreements, patent filings and licensing agreements are critical for preventing misappropriation and securing the benefits of global innovation (Davis, 2004).
On the policy side, the international expansion of IP protection has sparked debates, particularly regarding its costs and benefits for less-developed nations (Besley & Ghatak, 2010; Chen & Puttitanun, 2005; Jha, Dhanaraj, & Krishnan, 2018). Comparing countries across hemispheres, Dinopoulos and Segerstrom (2010, p. 13) concluded that
[...] stronger IP rights protection in the South (i.e., the adoption and implementation of the Trade-Related IP agreement) leads to a permanent increase in the rate of technology transfer to the South within multinational firms, a permanent increase in R&D employment by Southern affiliates of Northern multinationals, a permanent decrease in the North–South wage gap, and a temporary increase in the Northern innovation rate.
These knowledge transfers and spillovers broaden countries’ domestic product diversification, increase the value-added of exports and improve overall economic standards. As a result, the trajectory of export revenues can serve as a predictor of a country’s economic growth potential (Hausmann, Hwang, & Rodrik, 2007).
2.3 Business environment for innovation
The institutional perspective argues that competitiveness emerges from the interplay between institutions and organizations. In this view, firms’ strategic behavior is contingent upon the institutional and regulatory environment in which they operate (Peng, Sun, Pinkham, & Chen, 2009).
As global business environments evolve, firms must continuously adapt their IP strategies to stay competitive and leverage their intellectual assets. This requires approaches sensitive to regional disparities in IP protection and employs mechanisms such as hierarchical segmentation and modularity to safeguard innovation (Cheng & Bolon, 1993; Dividino, Cahen, & Berte, 2022).
With the increasingly decentralized nature of global R&D, multinational corporations establish research facilities in countries with varying levels of IP enforcement. In weak IP regimes, IIPRS encourages hierarchical segmentation by breaking down complex systems into quasi-independent modules. These modules are allocated across countries based on their IP protection strength, centralizing core components in jurisdictions with strong IP laws while decentralizing less sensitive tasks to lower-cost locations (Jha et al., 2018; Quan & Chesbrough, 2010).
This modular R&D structure helps secure core innovations and enhances access to global talent and resources. It enables firms to operate in regions with weaker IP regimes while mitigating the risk of misappropriation (Cheng & Bolon, 1993; Dividino et al., 2022; Davis, 2004).
From a regulatory standpoint, the World Bank compiles data on business regulations and institutional quality across countries. Its Ease of Doing Business Index is widely used by scholars, executives and policymakers as a proxy for the business climate (Rogge & Archer, 2021). Complementing this, the Global Innovation Index provides a comprehensive measure of countries’ innovation environments (Yu, Huarng, & Huang, 2021).
Regarding the broader innovation environment, the Economic Complexity Index (ECI), developed by Hidalgo and Hausmann (2009), captures the sophistication of national economies based on the diversity and uniqueness of their exports. More complex economies trade a greater variety of specialized products with a broader range of partners. For example, Sweet and Maggio (2015) found a positive relationship between stronger IP protection and higher ECI levels.
By incorporating macro-environmental factors such as infrastructure, institutional strength and entrepreneurial dynamics, and aiming to assess how a country’s environment facilitates or hinders innovation (Bayraktar, 2013; Pinheiro-Alves & Zambujal-Oliveira, 2012), this study proposes the following hypotheses:
The Business Environment for Innovation of a country positively influences the IP applications of non-residents.
The Business Environment for Innovation of a country positively influences the IP applications of residents.
2.4 Consumption capacity
Consumption capacity refers to a country’s purchasing power and domestic market size (Sanders & Shabalala, 2014; Linton, 2016). Along with institutional characteristics, it serves as a major attractor for IP applications, particularly in the context of market entry strategies (Jayachandran, Kaufman, Kumar, & Hewett, 2013).
Weinhold and Nair-Reichert (2009) found that domestic market size and global integration are factors motivating both residents and non-residents to apply for IP protection. Their study identified a direct relationship between middle-class population share and innovation levels.
Similarly, Süzeroğlu-Melchiors et al. (2017) interviewed experts in the IP registration process and observed that companies pursuing marketing or licensing strategies maintain broader international coverage of their intellectual properties than those with primarily production or operational strategies. These experts also reported that specialized consultancies and lawyers guide clients in defining the international scope of IP registration based on five key destination-related factors: markets, competition, production facilities, potential licensors and potential partners.
Sharma et al. (2021) investigated patent filings in 19 Organisation for Economic Co-operation and Development (OECD) member countries and found a positive relationship between foreign patent filings and the productivity of the destination country. These results reinforce Weinhold and Nair-Reichert’s (2009) earlier findings that domestic market size and global integration are important drivers of IP registration for both residents and non-residents. Building on this, countries with more dynamic markets and knowledge-based production structures tend to attract more innovative firms, leading to higher levels of IP registration (Bruno et al., 2021).
Given that the concept of attractiveness at the country level is highly complex, organizations such as the OECD, the World Bank, and the International Monetary Fund are frequently used as reliable data sources for scholars studying consumption capacity, particularly through metrics like Gross Domestic Product (GDP) per capita, household expenditure and domestic credit (Buitrago & Barbosa Camargo, 2021).
Finally, because overall market attractiveness is perhaps impossible to model in full, this study focuses specifically on a country’s total or potential consumption capacity (Jayachandran et al., 2013; Sanders & Shabalala, 2014; Linton, 2016; Taujanskaitė, Milčius, & Dobrovolskienė, 2017). Hence, we hypothesize that
The consumption capacity of a country positively influences the IP applications of non-residents.
The consumption capacity of a country positively influences the IP applications of residents.
2.5 Research and Development Effort
The resource-based view recognizes unique capabilities underpinning competitiveness, which encompass both tangible and intangible resources (Barney, 2001). At the country level, R&D effort reflects the allocation of physical and human resources to research and technology development, signaling a nation’s commitment to innovation (Crespi & Geuna, 2008; Mueller, 2016; Rao, Yu, & Cao, 2013).
In the multinational context, firms from developed countries often operate with higher technological sophistication and quality than local companies in less-developed destinations. This accelerates imitation by local competitors and pushes domestic standards upward (Ghosh & Ishikawa, 2013). Over time, such technology transfer effects contribute to increased local R&D activity (Foley & Manova, 2015; Oliva et al., 2019; Veugelers & Houte, 1990; Carree et al., 2015).
Education and scientific research are widely acknowledged as critical to R&D output, prompting countries to design and implement policies that direct labor and capital investments toward long-term economic growth (Crespi & Geuna, 2008; Erfanian & Ferreira Neto, 2017). Consistent with this view, R&D expenditure, particularly as a share of GDP, is a common proxy for a country’s development effort (Rao et al., 2013). Hence, we hypothesize that
The Research and Development Effort of a country positively influences the IP applications of non-residents.
The Research and Development Effort of a country positively influences the IP applications of residents.
3. Methods and model of analysis
Drawing on the preceding literature review, we propose a Model of International IP Applications to examine differences in behavior of resident and non-resident IP applicants in 98 countries. The model comprises five latent variables (constructs) that are interrelated, as illustrated in Figure 1.
The conceptual model consists of five ovals arranged from left to right. On the left side, an oval is labeled “Business environment for innovation”. At the top center, an oval is labeled “Consumption capacity”. At the bottom center, an oval is labeled “R and D effort”. On the right side, two ovals are present, with the upper oval labeled “Non-resident I P applications” and the lower oval labeled “Resident I P applications”. Arrows labeled “A” to “I” connect these ovals, which indicate directional relationships. “A”, “B”, “C”, and “D” originate from “Business environment for innovation”. “A” connects “Business environment for innovation” to “Consumption capacity”. “B” connects “Business environment for innovation” to “R and D effort”. “C” connects “Business environment for innovation” to “Non-resident I P applications”. “D” connects “Business environment for innovation” to “Resident I P applications”. “E” connects “Consumption capacity” to “R and D effort”. “F” connects “Consumption capacity” to “Non-resident I P applications”. “G” connects “Consumption capacity” to “Resident I P applications”. “H” connects “R and D effort” to “Non-resident I P applications”. “I” connects “R and D effort” to “Resident I P applications”.Model of international intellectual property applications – theoretical. Source(s): Developed by the authors
The conceptual model consists of five ovals arranged from left to right. On the left side, an oval is labeled “Business environment for innovation”. At the top center, an oval is labeled “Consumption capacity”. At the bottom center, an oval is labeled “R and D effort”. On the right side, two ovals are present, with the upper oval labeled “Non-resident I P applications” and the lower oval labeled “Resident I P applications”. Arrows labeled “A” to “I” connect these ovals, which indicate directional relationships. “A”, “B”, “C”, and “D” originate from “Business environment for innovation”. “A” connects “Business environment for innovation” to “Consumption capacity”. “B” connects “Business environment for innovation” to “R and D effort”. “C” connects “Business environment for innovation” to “Non-resident I P applications”. “D” connects “Business environment for innovation” to “Resident I P applications”. “E” connects “Consumption capacity” to “R and D effort”. “F” connects “Consumption capacity” to “Non-resident I P applications”. “G” connects “Consumption capacity” to “Resident I P applications”. “H” connects “R and D effort” to “Non-resident I P applications”. “I” connects “R and D effort” to “Resident I P applications”.Model of international intellectual property applications – theoretical. Source(s): Developed by the authors
The model was operationalized using publicly available secondary data from international institutions and organizations in a cross-sectional study for the year 2015. Hypotheses corresponding to paths A to–I were tested using Partial Least Squares Structural Equation Modeling (PLS-SEM).
After data cleaning, the analysis was conducted with 16 observed variables. Details on dataset selection, as well as the composition of observed and latent variables, are provided in Supplementary File 1.
4. Results and discussion
The Model of International IP Applications was estimated using PLS-SEM with the assistance of SmartPLS software (Ringle, Wende, & Becker, 2015). Figure 2 presents the empirical model, showing only paths that are significant at the 95% confidence interval.
The conceptual model consists of five ovals arranged from left to right, with statistical values displayed inside or along connecting arrows. On the left side, an oval is labeled “Business environment for innovation”. At the top center, an oval is labeled “Consumption capacity”, which includes the values “R-squared equals 0.49” and “Q-squared equals 0.30”. At the bottom center, an oval is labeled “R and D effort”, which includes the values “R-squared equals 0.79” and “Q-squared equals 0.54”. On the right side, two ovals are present. The upper oval is labeled “Non-resident I P applications” and includes “R-squared equals 0.51” and “Q-squared equals 0.38”. The lower oval is labeled “Resident I P applications” and includes “R squared equals 0.69” and “Q squared equals 0.53”. Labeled arrows connect these ovals, each with path coefficient and effect size values. Arrow “A” connects “Business environment for innovation” to “Consumption capacity” with “P C equals 0.70” and “f squared equals 0.99”. Arrow “B” connects “Business environment for innovation” to “R and D effort” with “P C equals 0.39” and “f-squared equals 0.40”. Arrow “E” connects “Consumption capacity” to “R and D effort” with “P C equals 0.57” and “f squared equals 0.83”. Arrow “F” connects “Consumption capacity” to “Non-resident I P applications” with “P C equals 0.82” and “f squared equals 0.41”. Arrow “G” connects “Consumption capacity” to “Resident I P applications” with “P C equals 0.52” and “f squared equals 0.26”. Arrow “I” connects “R and D effort” to “Resident I P applications” with “P C equals 0.60” and “f squared equals 0.26”.Model of international intellectual property applications – empirical. Note: Nonsignificant paths at the 95% confidence interval were removed from the figure. Calculated through bootstrapping with 5,000 samples. R2: Coefficient of determination for the regression; Q2: Stone–Geisser’s predictive relevance considered small if <0.15, medium if between 0.15 and 0.35 and large if >0.35; PC: path coefficient standardized (−1 to 1); f2: effect, considered small if <0.15, medium if between 0.15 and 0.35 and large if >0.35 (Hair et al., 2014). Source(s): Developed by the authors
The conceptual model consists of five ovals arranged from left to right, with statistical values displayed inside or along connecting arrows. On the left side, an oval is labeled “Business environment for innovation”. At the top center, an oval is labeled “Consumption capacity”, which includes the values “R-squared equals 0.49” and “Q-squared equals 0.30”. At the bottom center, an oval is labeled “R and D effort”, which includes the values “R-squared equals 0.79” and “Q-squared equals 0.54”. On the right side, two ovals are present. The upper oval is labeled “Non-resident I P applications” and includes “R-squared equals 0.51” and “Q-squared equals 0.38”. The lower oval is labeled “Resident I P applications” and includes “R squared equals 0.69” and “Q squared equals 0.53”. Labeled arrows connect these ovals, each with path coefficient and effect size values. Arrow “A” connects “Business environment for innovation” to “Consumption capacity” with “P C equals 0.70” and “f squared equals 0.99”. Arrow “B” connects “Business environment for innovation” to “R and D effort” with “P C equals 0.39” and “f-squared equals 0.40”. Arrow “E” connects “Consumption capacity” to “R and D effort” with “P C equals 0.57” and “f squared equals 0.83”. Arrow “F” connects “Consumption capacity” to “Non-resident I P applications” with “P C equals 0.82” and “f squared equals 0.41”. Arrow “G” connects “Consumption capacity” to “Resident I P applications” with “P C equals 0.52” and “f squared equals 0.26”. Arrow “I” connects “R and D effort” to “Resident I P applications” with “P C equals 0.60” and “f squared equals 0.26”.Model of international intellectual property applications – empirical. Note: Nonsignificant paths at the 95% confidence interval were removed from the figure. Calculated through bootstrapping with 5,000 samples. R2: Coefficient of determination for the regression; Q2: Stone–Geisser’s predictive relevance considered small if <0.15, medium if between 0.15 and 0.35 and large if >0.35; PC: path coefficient standardized (−1 to 1); f2: effect, considered small if <0.15, medium if between 0.15 and 0.35 and large if >0.35 (Hair et al., 2014). Source(s): Developed by the authors
The constructs in Figure 2 display the coefficients of determination (R2) and cross-validated (Q2) values, which respectively indicate the accuracy and predictive relevance of the model. Paths A–I report their standardized path coefficients (PC) and effect sizes (f2).
The model demonstrates good fit, with an Standardized Root Mean Square Residual (SRMR) of 0.053 (p < 0.000), and strong predictive capability (the lowest coefficient of determination is approximately 0.50). Furthermore, all constructs present at least medium Q2 values, confirming predictive relevance (Hair, Hult, Ringle, & Sarstedt, 2014). Internal consistency, convergent validity and discriminant validity were assessed and met the acceptance criteria of Henseler, Ringle and Sarstedt (2014). Additional details on model features and quality are provided in Supplementary File 2.
Regarding the relationships between constructs, some coefficients reached high levels of relevance, particularly paths F and A, while only path B had a coefficient below 0.50. Path H was the sole nonsignificant relationship. In terms of effect size, paths C, D and H were not significant, whereas relatively high effects were observed for paths A and E.
The statistical results from our theoretical model suggest a sequence of three causal stages:
Stage 1: A business-friendly environment positively influences a country’s purchasing power and the allocation of physical and human resources to R&D.
Stage 2: R&D efforts lead to domestic patent, industrial design and trademark applications but do not significantly motivate foreign IP applications.
Stage 3: A country’s consumption capacity stimulates both foreign and domestic IP registrations, with a stronger influence on foreign applicants.
From the model in Figure 2, the most direct predictor of foreign IP registrations is a country’s consumption capacity. This construct is the only factor in our model with a direct effect on IP applications by non-residents. This finding supports the view that elements linked to consumption capacity, such as purchasing power and domestic market size, play a critical role in attracting foreign IP registrations (Sanders & Shabalala, 2014; Linton, 2016).
This result partially corroborates the findings of Weinhold and Nair-Reichert (2009), who identified market size and country integration as key factors influencing IP filings and innovation. Likewise, Süzeroğlu-Melchiors et al. (2017) reported that market conditions and competition rank among the main concerns of international IP application advisors.
A second construct to consider is the existence of a business-friendly environment for innovation, which can stimulate the creation of knowledge-intensive ventures (Dinopoulos & Segerstrom, 2010; Naghavi, 2007). Supporting this rationale for IP applications by non-residents, prior research has found a positive relationship between mature legal systems, open economies and the attraction of foreign entities (Sweet & Maggio, 2015; Gould & Gruben, 1996; Hausmann et al., 2014).
In this study, no evidence was found of a direct link between environmental factors influencing a country’s innovation, such as infrastructure availability, entrepreneurial climate and institutional strength and the IP claims of local or international applicants. One possible explanation is that competitiveness emerges from the interaction between institutions and organizations, shaping firms’ strategies according to their environment (Peng et al., 2009). The environment is thus indirectly important for IP applications, as it fosters R&D capacity and broader economic development, which in turn can expand consumption capacity.
This finding reinforces the importance of macro-environmental factors, such as infrastructure, entrepreneurial climate and institutional strength, in enabling business innovation. These elements interact with institutions and organizations to create conditions conducive to IP generation (Bayraktar, 2013; Pinheiro-Alves & Zambujal-Oliveira, 2012). This trend is consistent with common R&D internationalization strategies that tailor IP protection to regional variations in enforcement mechanisms (i.e., institutional environment) through approaches such as hierarchical segmentation and modularity (Cheng & Bolon, 1993; Dividino et al., 2022). Similarly, Sweet and Maggio (2015) found a positive association between stronger IP protection and higher economic complexity (Hidalgo & Hausmann, 2009).
The third construct, R&D effort, also plays a distinct role. Our findings support a causal relationship between R&D effort and domestic IP applications, but we found no evidence of a similar effect for non-resident applications. For residents, this relationship aligns with the economic cycle of innovation: a favorable business environment fosters effective R&D, which in turn drives domestic IP activity. The absence of a similar link for non-residents contrasts with the mainstream internationalization literature on knowledge seeking (Griffith et al., 2008).
IB theory suggests that companies seeking knowledge or resources, such as skilled researchers, are attracted to countries with high R&D investment, leading to more IP filings by foreign entities (Dunning & Lundan, 2008; Griffith et al., 2008). Conversely, higher domestic R&D spending can also increase a country’s capacity for imitation through accumulated knowledge and spillovers (Hidalgo et al., 2007; Oliva, 2014). This may prompt foreign firms to register IP as a protective measure (Sanders & Shabalala, 2014; WIPO, 2003).
For the domestic context, our findings are consistent with established literature: patents, industrial designs and trademarks stem from the application of physical and human resources to basic research, industrial development and product or service innovation (Kemp, 2005; Chen & Puttitanun, 2005; Athreye & Cantwell, 2007). However, our results suggest that greater national capacity to absorb and replicate complex innovations does not necessarily attract more foreign IP registrations, contrary to the considerations of knowledge types reported by Süzeroğlu-Melchiors et al. (2017). At the country level, the risk of knowledge leakage may be underestimated, receiving less emphasis in strategic decisions. A summary of key differences between residents’ and non-residents’ IP filings, with respect to R&D effort, is available as Supplementary File 3.
From a broader perspective, our results indicate that IP strategists tend to prioritize market factors over R&D when selecting filing destinations. Within our analytical model, a country’s consumption capacity emerges as the primary direct driver of foreign IP registrations. Notably, consumption capacity also directly influences domestic IP filings, exerting an effect comparable to R&D in resident applications (Jayachandran et al., 2013; Sanders & Shabalala, 2014; Linton, 2016; Taujanskaitė et al., 2017).
One explanation comes from the findings of Sweet and Maggio (2015), who observed a positive correlation between IP protection and the ECI. In this context, the imitation potential associated with strong R&D capacity may be offset by robust IP protection systems, as countries with higher imitation capacity are often also those with stronger IP guarantees.
This interpretation is further supported by Weinhold and Nair-Reichert (2009), who identified a positive correlation between a larger proportion of middle-class citizens – indicative of purchasing power – and greater innovation. The positive and significant relationship between consumption capacity and R&D effort (path E in our model) further reinforces this link.
However, the moderating role of IP protection in offsetting imitation risk is not evident in our model from the perspective of the business environment: no direct relationship was found between the business environment for innovation and non-resident patent applications, as previously discussed.
In conclusion, domestic R&D strongly drives resident IP applications, directly benefiting local innovation. For non-resident applications, the influence of domestic R&D is indirect, mediated by factors such as IP protection, market size and foreign direct investment (FDI). Supplementary File 3 provides a summary of these findings.
5. Conclusions
5.1 Theoretical contribution
The first theoretical contribution of this study is the identification of a three-stage process in IP applications: In Stage 1, a business-friendly environment fosters resource allocation to R&D; in Stage 2, R&D efforts drive domestic IP applications but do not significantly encourage foreign filings; in Stage 3, consumption capacity influences both domestic and foreign IP applications, with a stronger effect on the latter.
While domestic applications are closely tied to local innovation ecosystems and R&D, foreign filings are more market-driven, reflecting external economic and strategic priorities. Our findings suggest that the institutional environment alone does not directly increase IP applications; rather, it provides the necessary foundation for organizations to generate IP outputs.
A second contribution is the conceptual design of the main constructs that significantly influence both domestic and foreign IP filings. These constructs capture the elements shaping a country’s innovation landscape, affecting how resident and non-resident entities engage with its IP system. Scholars may find value in exploring these elements further by using the secondary data sources identified in our supplementary files.
A third contribution is the empirical identification of global R&D strategy aspects and the cumulative effects of their implementation. The IIPRS is reshaping the priorities and motivations of foreign investors in IP registration: the original purpose of protection against imitation is no longer dominant in this evolving context, where IP filings can also serve strategies such as enforcing, exploiting, securing or blocking innovation (Süzeroğlu-Melchiors et al., 2017).
Finally, while certain factors, such as the technological environment and sectoral trends, affect both foreign and domestic IP applications, domestic filings rely more heavily on local R&D efforts, market conditions and government support. Foreign applications are more strongly influenced by external drivers, including trade, FDI and the IP protection regime, consistent with the focus of the IIPRS. These findings can guide policymakers and public managers in designing policies to attract technology and foreign investment.
5.2 Managerial and social implications
Businesses can use these insights to refine their IP registration strategies, balancing trade-offs between legal protection and market potential. Likewise, managers of innovative firms can apply these findings to make more informed decisions on where and how to register IP, as well as how to balance IP protection with trade secrets.
A summary of the main factors managers should consider is available in Supplementary File 4.
In addition to its practical contributions, the results underscore the importance of tailoring policies to the distinct drivers of domestic and foreign IP applications. Policymakers can promote local innovation by supporting R&D and fostering a robust business environment. For foreign IP filings, enhancing market attractiveness through economic stability and strong consumption capacity is critical.
Ultimately, understanding the different influences on domestic and foreign IP applications provides actionable insights for policymakers and businesses, contributing to innovation-driven growth and global competitiveness.
5.3 Limitations and opportunities for further research
Our findings suggest that, for foreign applicants, domestic R&D efforts play a lesser role in shaping international IP registration strategies. We hypothesize that the traditional motivation to protect against imitation has been surpassed by the market potential of target countries. However, this conclusion rests on the assumption that countries with higher innovation capacity also possess greater ability to imitate foreign technologies and to leverage technology spillovers from subsidiaries. We acknowledge that this assumption may reflect a narrow view of the phenomenon and recommend that future research specifically investigate what we term “imitation risk.”
A major challenge in this research was compiling a reliable database, given the variety of sources, reconciliation of reported data, differences in reporting periods, breaks in time series and methodological changes introduced by local authorities. We devoted considerable attention to data verification and cleansing and opted for a cross-sectional design. One limitation of this choice is the inherent lag in data availability, as it takes time for information to be collected, standardized and published by international organizations. For this reason, 2015 was selected as the year with the best balance between timeliness and completeness before the onset of deglobalization.
The cross-sectional nature of this study limits its ability to capture dynamic changes over time or sector-specific nuances. Additionally, the data compilation challenges highlight the need for standardized, longitudinal data sources. We encourage future analyses to employ longitudinal methodologies that allow for a greater number of observations and a more granular investigation of country-specific characteristics, while cautioning researchers about the substantial challenges of compiling exhaustive datasets.
Furthermore, the heterogeneity of our sample, reflecting substantial differences among countries, may limit the validity of the model. We suggest that future research explores moderating factors such as country size, level of development and especially institutional environment attributes, including legal frameworks, political systems and participation in economic communities.
Finally, further research should address the role of FDI and multinational investments. This study did not incorporate FDI moderators or controls, although FDI is known to significantly influence foreign IP filings, as multinational corporations often protect their IP in host countries. FDI may also indirectly affect domestic filings by enhancing local innovation capacity through knowledge spillovers and joint ventures.
The authors would like to acknowledge the support from the Graduate Program in Business Administration (PPGA) at the School of Economics, Business, Accounting and Actuarial Science (FEA), University of São Paulo (USP); National Council for Scientific and Technological Development (CNPq); Coordination for the Improvement of Higher Education Personnel (CAPES); Fundação Instituto de Administração (FIA); and The São Paulo Research Foundation (FAPESP). This study was financed, in part, by the São Paulo Research Foundation (FAPESP), Brazil. Process Number 2019/15700-4.
The supplementary material for this article can be found online.
