Profiting from innovation through cross-border market co-creation and co-opetition: the case of global pharmaceuticals

We study the impact of the new intellectual property (IP) regime, as shaped by international agreements such as the Trade-Related Aspects of Intellectual Property Rights (TRIPS), on the competitive positions of emerging country firms and advanced country multinational enterprises (AMNEs). Drawing on ideas from the IP, international business, and strategic management literatures, we formalize the market co-creation perspective and extend it to the emerging country - AMNE context. Using the pharmaceutical industry as our focus, we show that market co-creation-based co-opetition is preferable to both emerging and advanced country firms when the former can leverage their firm- and country-specific advantages and complementary assets to co-create new market space, even as they compete for value capture. We further show that co-opetition is fostered when the bargaining power of the AMNE (afforded through trade agreements) is counterbalanced by actions of emerging country firms and a robust IP law interpretation and enforcement by the host country's courts.