This paper considers IPR protection as a determinant of FDI mode. By analyzing wholly-owned investment and equity joint venture in vertically related industries, this study finds that as IPR protection gets stringent, the propensity of equity joint venture decreases. The firm-level data set from Taiwanese multinational manufacturing enterprises in 2006 lends supports to this result. This paper also finds that the local welfare increases after MNEâs entry if the local market size is not too large. In addition, after MNEâs entry, strengthening IPR is beneficial to the MNE but is detrimental to local welfare.
