Markets for Technology and their Implications for Corporate Strategy

Abstract

Although market transactions for technologies, ideas, knowledge or information are limited by several well-known imperfections, there is evidence that they have become more common than in the past. In this paper we analyze how the presence of markets for technology conditions the technology and corporate strategy of firms. The first and most obvious implication is that markets for technology increase the strategy space: firms can choose to license in the technology instead of developing it in-house or they can choose to license out their technology instead of (or in addition to) investing in the downstream assets needed to manufacture and commercialize the goods. The implications for management include more proactive management of intellectual property, greater attention to external monitoring of technologies, and organizational changes to support technology licensing, joint-ventures and acquisition of external technology. For entrepreneurial startups, markets for technology make a focused business model more attractive. At the industry level, markets for technology may lower barriers to entry and increase competition, with important implications for the firms' broader strategy as well.

Caveat emptor as an obstacle to business transfers: Effect of product line liability exceptions on acquisitions, entry, and exit

“…Together, our findings speak to recent studies that have highlighted the role of exit via acquisitions (Arora et al, 2001; Catalini et al, 2019; Furr & Kapoor, 2018; Moeen & Agarwal, 2017; Spulber, 2013). Indeed, in our data, exit via sales had a 33% employment share of all exits over 2004–2013, with the share being 40% or higher in some years (Online Appendix Table A3.10).…”

Caveat emptor as an obstacle to business transfers: Effect of product line liability exceptions on acquisitions, entry, and exit

“…Together, our findings speak to recent studies that have highlighted the role of exit via acquisitions (Arora et al, 2001; Catalini et al, 2019; Furr & Kapoor, 2018; Moeen & Agarwal, 2017; Spulber, 2013). Indeed, in our data, exit via sales had a 33% employment share of all exits over 2004–2013, with the share being 40% or higher in some years (Online Appendix Table A3.10).…”

Licensing-In Technology Markets: How the Strength of Patents Influence Firm Strategies and Competition? Empirical Evidence from the 2004 Indian Patent Reforms

“…Once again, this result is also in line with other work in the literature that suggests that licensing is prevalent in industries in which technology can be sold in a disembodied form (Arora, Fosfuri, Gambardella, 2002). We formally state this as a hypothesis below.…”

Innovation Disclosures and the Design of Technology Acquisition Contracts: Evidence from the American Inventors Protection Act

“…Lastly, our findings build upon and extend research on markets for technology (e.g., Arora and Gambardella, 2010;Arora, Fosfuri, and Gambardella, 2001;Gans and Stern, 2003).…”

Caveat emptor as an obstacle to business transfers: Effect of product line liability exceptions on acquisitions, entry, and exit

“…Together, our findings speak to recent studies that have highlighted the role of exit via acquisitions (Arora et al, 2001; Catalini et al, 2019; Furr & Kapoor, 2018; Moeen & Agarwal, 2017; Spulber, 2013). Indeed, in our data, exit via sales had a 33% employment share of all exits over 2004–2013, with the share being 40% or higher in some years (Online Appendix Table A3.10).…”

Licensing-In Technology Markets: How the Strength of Patents Influence Firm Strategies and Competition? Empirical Evidence from the 2004 Indian Patent Reforms

“…Once again, this result is also in line with other work in the literature that suggests that licensing is prevalent in industries in which technology can be sold in a disembodied form (Arora, Fosfuri, Gambardella, 2002). We formally state this as a hypothesis below.…”

Innovation Disclosures and the Design of Technology Acquisition Contracts: Evidence from the American Inventors Protection Act

“…Lastly, our findings build upon and extend research on markets for technology (e.g., Arora and Gambardella, 2010;Arora, Fosfuri, and Gambardella, 2001;Gans and Stern, 2003).…”

Caveat emptor as an obstacle to business transfers: Effect of product line liability exceptions on acquisitions, entry, and exit

“…Together, our findings speak to recent studies that have highlighted the role of exit via acquisitions (Arora et al, 2001; Catalini et al, 2019; Furr & Kapoor, 2018; Moeen & Agarwal, 2017; Spulber, 2013). Indeed, in our data, exit via sales had a 33% employment share of all exits over 2004–2013, with the share being 40% or higher in some years (Online Appendix Table A3.10).…”

Licensing-In Technology Markets: How the Strength of Patents Influence Firm Strategies and Competition? Empirical Evidence from the 2004 Indian Patent Reforms

“…Once again, this result is also in line with other work in the literature that suggests that licensing is prevalent in industries in which technology can be sold in a disembodied form (Arora, Fosfuri, Gambardella, 2002). We formally state this as a hypothesis below.…”

Innovation Disclosures and the Design of Technology Acquisition Contracts: Evidence from the American Inventors Protection Act

“…Lastly, our findings build upon and extend research on markets for technology (e.g., Arora and Gambardella, 2010;Arora, Fosfuri, and Gambardella, 2001;Gans and Stern, 2003).…”