Imitation is a first-order concern for enterprises operating global production processes. Firms routinely source knowledge-intensive inputs from many countries, including those with weak intellectual property laws. This column argues that firms pursue a particular strategy to protect their knowhow in such an environment: slicing production across multiple suppliers to ensure that no single supplier learns enough to imitate. In global micro data on the auto industry, the concentration of sourcing across suppliers is U-shaped in the strength of intellectual property rights – a pattern driven by the protection of high-tech components.



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