The recent surge in anti-Chinese sentiment—which coincides with the U.S-China trade war and the covid-19 pandemic—presents a dilemma to Chinese multinationals: they aspire to establish and defend their intellectual property (IP) globally while shielding themselves from anti-Chinese sentiment. We propose an “identity arbitrage” model of IP strategy in which multinational corporations manage their national identities and create an impression of being local when attempting to establish their IP in foreign markets. We argue that (ⅰ) China based multinationals are more likely to use their non-China-based subsidiaries to apply for patents in the United States when facing a rising anti-Chinese sentiment, and (ⅱ) this identity-choosing strategy facilitates eventual granting of their patents. With the rise of nationalism globally, our research is timely and relevant for not only Chinese firms but also companies from other emerging markets, as they, too, face xenophobia in their entry into developed economies.
This project is funded by the HKUST IEMS Research Grants 2021.
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