A stakeholder-based view of the evolution of intellectual property institutions

In this article, we address several limitations of prior international business studies that investigate how and why intellectual property rights (IPR) institutions evolve in ways of consequence to multinationals. To do this, we develop a dynamic stakeholder-based view (SBV) of micro- and macro-processes shaping the evolution of formal institutions. The SBV micro-processes include (1) establishment of endogenous and exogenous stakeholders, (2) formation of stakeholders’ interests, (3) evaluation of stakeholders’ salience, (4) governance of the focal institution, and (5) interpretation of the impacts from institutional governance. The SBV macro-processes include (1) feedback loops among the micro-processes and (2) the stickiness of each stakeholder process. We demonstrate the explanatory power of our framework by offering historical examples of how and why the SBV processes have shaped the heterogeneous evolution of IPR institutions in China, the US, and other countries. We argue that IPR institutions, despite experiencing significant convergence in places, will continue to diverge across countries in ways of consequence to multinationals due to the stickiness of stakeholder processes. We also illustrate that the third SBV micro-process, evaluation of stakeholders’ salience, most immediately explains IPR institutions’ evolution. Our work challenges recent assertions about the evolution of IPR institutions and what this means for multinational firms doing business across borders.