Session 124

License to Deal: Technology Licensing, Innovation, and Corporate Investment

Track B

Date: Tuesday, October 13, 2009

 

Time: 10:00 – 11:15

Paper

Room: Meeting Room 14


Session Chair:
Gary Dushnitsky, London Business School

Title: Uncertainty, Strategic Flexibility and Exclusive Rights in International Technology Licensing Relationships

Authors

  • Preet Aulakh, York University
  • Marshall Jiang, Brock University
  • Sali Li, University of South Carolina

Abstract: Firms entering foreign markets through inter-organizational licensing consider two types of strategic flexibility. Granting exclusive rights to a particular firm allows greater coordination flexibility while non-exclusive rights give higher redeployment flexibility. We argue that the need for coordination and redeployment flexibility, and thus the choice between exclusive and non-exclusive contracts, are determined by a combination of micro- and macro-level uncertainties related to the potential licensee firm and the foreign market where the licensee is located. Empirical results based on 414 licensing agreements reported in the SDC database for the 1995-2008 period show that licensee’s absorptive capacity and complementary assets induce technology holders’ to grant exclusive rights and these relationships are enhanced by the strength of intellectual property protection regimes of the foreign markets.

Title: Licensing as a Source of Financing

Authors

  • Maria Isabella Leone, LUISS Guido Carli University
  • Raffaele Oriani, LUISS Guido Carli University

Abstract: Although addressed in the rising literature of IP-backed finance, the role of licensing in the financing of innovation has been under-investigated by scholars so far. Empirical evidence, instead, suggests that in some circumstances licensors is required to further develop the licensed technology which the licensee may finance by paying an upfront fee. Thus, the need for extra finances may affect the decision of the licensor to negotiate and thus actually agree on a specific form of payment. The aim of our paper is to investigate whether financial constrained licensors are more likely to choose an upfront license and more incline to credit a portion of the initial fee against future royalties to meet their short-term financing needs. We investigate this issue by relying on a dataset of patent licenses.

Title: Value Creation in Technology Licensing Deals: An Empirical Comparison of the Pharmaceutical and Computer Industries

Authors

  • Jorge Walter, George Washington University

Abstract: Our study examines the relationships between firm characteristics, industry network structures, and the performance impact of technology licensing activity. We argue that the explanations for licensing behavior can be categorized into two distinct sets of strategic motivations—resource-based and network-based—and that each has a unique effect on the performance impact of licensing agreements. Analyzing eleven years of licensing activity in the U.S. computer and pharmaceutical industries, we find that these two sets of motivations—and their associated performance effects—have a different relevance for different industry contexts. Understanding the strategic motivations underlying technology licensing activity should help us explain when and why firms use licensing to exploit their proprietary technology and to make better predictions about the impact of licensing agreements on firm performance.

Title: The Company They Keep: Returns to CVC in the Medical Device Industry, Entrepreneurial Clinicians, and Competitive Coinvestors

Authors

  • Sheryl Winston Smith, Temple University

Abstract: CVCs use direct equity investment to stimulate innovation that is appropriable by the investing firms. At the same time, CVC is also used for strategic goals which may include blocking competitors or gaining a window on competitor’s technology. Analyzing CVC investment in the medical device industry, I provide project level evidence that CVC investment is associated with the production of knowledge by the startup that is appropriated by the investing firm, and that the likelihood of these innovation returns are greater if the founder is an entrepreneurial clinician. However, the innovation returns are suppressed if multiple CVCs (competitive CVCs) coinvest in the same startup firm, particularly in higher rounds of investment. This paper expands our understanding of project level dynamics and innovation returns to CVC.

All Sessions in Track B...

Mon: 12:45 – 14:00
Session 123: The Configuration of Alliance Portfolios: Antecedents and Consequences
Mon: 15:45 – 17:00
Session 131: Managing External Relationships: Perception, Judgement and Action
Session 132: Uncertainty and the Leveraging of Relational Mechanisms in Alliances
Mon: 17:15 – 18:30
Session 126: Getting It Right: Buyer-Supplier Relationships
Tue: 10:00 – 11:15
Session 124: License to Deal: Technology Licensing, Innovation, and Corporate Investment
Tue: 11:30 – 12:45
Session 127: Law and Order: Alliance Governance Decisions
Session 134: Organizational Design and Networking Strategies under Uncertainty
Tue: 14:30 – 15:45
Session 128: Is He The One? Partner Selection and Tie Formation
Session 133: The Dynamics of Interorganizational Networks and Their Performance Implications
Wed: 10:00 – 11:15
Session 129: Putting Things in Context: Competition and Network Dynamics
Wed: 11:30 – 12:45
Session 130: Alliances, Knowledge Transfer, and Performance
Session 135: The Good, the Bad and the Not so Bad: Enhancing Performance by Discerning External Relationships


Strategic Management Society

Washington DC