Product portfolio performance in new foreign markets: The EU trademark dual system

How do intellectual propriety rights (IPRs) help firms profit from their innovation? Innovation literature frequently
turns to patents to measure innovative IPR, but more recent work shifts focus to the other side of IPR,
namely, trademarks. This article therefore discusses the effects of trademark strategies when companies decide
to introduce their product portfolios in a new foreign market. Entrants might opt for a common trademark across
different country markets (integration) or use several country-specific trademarks (responsiveness). This empirical
study exploits the quasi-natural experiment created by the tariff shock that affected Spain when it joined
the European Union in the 1990s. Data from the automotive industry reveal how non-European companies that
already operated in other European countries sought to enter Spain rapidly, using various trademark strategies.
The product portfolio characteristics are fixed at entry, so this study can specify how and when trademark
responsiveness versus integration affects firm performance. The results reveal that trademark responsiveness
increases firm performance if the firms suffer high liabilities of foreignness or newness.