Title: Can marketing counter technology leakage effects in emerging markets?

Authors: Amit Bhatnagar; Siddhartha S. Syam

Addresses: Sheldon B. Lubar School of Business, University of Wisconsin – Milwaukee, Milwaukee, Wisconsin, USA ' College of Business Administration, Marquette University, Milwaukee, Wisconsin, USA

Abstract: Motivated by both cost savings and market opportunities, MNCs increasingly offshore production to emerging markets. Unfortunately, these markets often have weak copyright laws and even weaker enforcement culture that enable rampant unauthorised technology leakages. We develop an analytical model to investigate if investments in marketing and promotion can protect demand. Demand is modelled as a multiplicative function of two factors, base demand which depends on R&D and multiplier demand due to promotion and marketing. Three scenarios are investigated: (a) production and retailing independently in each market (b) outsourcing production for domestic and offshore markets to the offshore facility and (c) outsourcing with reverse competition in the home market from offshore competitors. We conduct an extensive simulation experiment and find that for a medium length planning horizon of five to six years, it is indeed possible to use promotion efforts to protect market share.

Keywords: offshoring; intellectual property theft; analytical economic models.

DOI: 10.1504/EJIM.2024.141643

European Journal of International Management, 2024 Vol.24 No.3/4, pp.700 - 718

Received: 18 Dec 2019
Accepted: 17 May 2020
Published online: 30 Sep 2024 *

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