706 Innovation Vision 2020: Sustainable growth, Entrepreneurship, and Economic Development Intellectual Property Rights Role in Moderating Internal and External R&D Relationship with Operational Performance: Chemical and Metallurgical Manufacturing Firms in Malaysia Herman Shah Anuar, Faisal Zulhumadi, Zulkifli Mohamed Udin. School of Technology Management and Logistics UUM College of Business, Universiti Utara Malaysia Sintok, Kedah. Malaysia. herman@uum.edu.my; faisal@uum.edu.my; zulkifli@uum.edu.my, Abstract The purpose of this paper is to elaborate the findings which stated that intellectual property rights (patent) have a moderating effect to the relationship between internal, external R&D towards operation performance of chemical and metallurgy manufacturing firms in Malaysia. The construct of this paper is based on statistical output derived from statistical package for social sciences version 19. Survey method is used throughout the study focusing on chemical and metallurgy firms in Malaysia. The unit of analysis chosen was organization. From this study, it was found that intellectual property rights policy pertaining patents should become part of firm’s business strategy. Implementing IPR will safeguard firm’s new invention, innovation or processes in the long run. Furthermore, firm may gain benefits in creating new business opportunity during various patenting stages. Strict enforcement of IPR could yield better incentives on innovation. In the long run, revenue obtained from IPR can be used to finance innovation and R&D activities. Implementation of IPR has tendencies to stimulate more research, innovation and have potential to reduce manufacturing employment. Applying innovative and creative ideas by protecting it through intellectual property rights is able to help firm’s long term success. We discuss that IPR can become as firm’s business strategy, which can contribute for benefits of the innovation and creativity, improvement in products that will increase profit margins and gain royalty revenue through patented inventions from companies who commercialize the product. Keywords: internal R&D, external R&D, patents, operation performance. 1.0 Introduction Intellectual property rights have become a common phrase among industrial community. The commonly argued is whether to apply protection for patent, copyright, trademark, trade secret, or any other type of IP protection. In this millennium, R&D and IP managers tries to cope up with better information exchange, shared resources that promotes win-win relationship among the members of the department, fully utilise usage of technology, efficient teamwork spirit and effective processes that create value to customers and the organisations which later on could yield IP protection. When IP protection is guaranteed, this will contribute to the long lasting funds for another invention that benefitted the organisation, industry and society as a whole. As mentioned by Burrone and Jaya (2004), protecting ones invention, new products or processes carries along with it the long lasting advantages. This includes getting and achieving access to new markets with