Arm's Length and Captive Transactions: Patent-Based View of Control in Internationalization

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This conceptual paper responds to the need for examining the role of patent control over internationalization. It proposes the patent-based strategy of control, in other words, how 3Cs - complementarity, competitiveness, and conditions - impact the strategic decision on corporate control over the patent; thereby the option of commercialization between arm's length and captive transactions. It demonstrates the multiple theoretical natures of business strategies; emphasizes how strategic fit can impact the decision on control; addresses patents as intangible assets that form a comparative and competitive advantage rather than only as a legal right and that have bearing on strategic decision making. The paper proposes that the intention of high control over a patent drives the owner to opt for captive transactions; low control arm's length transactions. Nonetheless, the challenge lies before the decision is made; managers need to assess the 'strategic fit' elements that directly impact on the extent of control.

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Elsevier Inc.

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International Business Review