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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17 August 2026

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VoxEU

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https://cepr.org/voxeu/columns/firms-slice-global-production-protect-their-knowhow

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This publication comes under the following theme: Global firms