What induces firms to license foreign technologies? International survey evidence

Abstract

The paper provides insights into drivers of foreign technology licensing from the licensee's perspective, using data across 114 nations. Technology licensing enables licensees to access proven technologies without development delays, although licensors might deny licenses for strategic reasons. Results show that firms with own R&D are more likely to license foreign technologies, as are larger firms and firms in the nations' main business cities. However, the macroeconomic and institutional environment matters as well: domestic interest rates, informal sector competition, and the literacy of a country's labor force all impact foreign technology licensing.Some implications for technology policy are discussed.

An innovation adoption model of licensing-in for US start-ups

“…Recent research around licensingin offers insight into its potential determinants. Consistent with the absorptive capacity approach of Cohen and Levinthal (1990), more recent research suggests that higher internal R&D capabilities are positively linked to licensing-in activity by large firms (Cassiman and Veguelers 2006;Tsai and Chang 2008;Wang and Li-Ying 2014), including international licensing-in, Dohse et al (2019). However, for the specific case of licensing-in within small start-ups, there has been little evidence to corroborate this.…”

“…on the level of risk, breadth of product lines, and speed-to market) all affirm the utility of licensing-in (Authane-Gima 2003), as do the scarcity of resources, both human and financial. Such resources have been shown to enhance open innovation (Dreschler and Natter 2012), particularly for inward licensing (Dohse et al 2019;Jang et al 2019), including in international settings.…”

“…Firm characteristics include Size, as open innovation tends to more driven by larger than smaller firms (van deVrande et al 2009; Licthenthaler 2008;Dohse et al 2019). Measures capturing ownership status include Incorporated and Team, similar toZahra et al (2005) andDohse et al (2019), and measures of the resources of the firms include assets (Purchased), financial assets (Equity, Debt) and human capital (PhD), followingCassiman and Veugelers (2006) who argue that a lack of resources positively influence the licensing-in of IP. Other works supporting a positive effect for human capital includeDohse et al (2019).…”

“…Measures capturing ownership status include Incorporated and Team, similar toZahra et al (2005) andDohse et al (2019), and measures of the resources of the firms include assets (Purchased), financial assets (Equity, Debt) and human capital (PhD), followingCassiman and Veugelers (2006) who argue that a lack of resources positively influence the licensing-in of IP. Other works supporting a positive effect for human capital includeDohse et al (2019). As indicated above,Gallié and Legros (2012), in investigating firm IP protection, find that industrial firms are more likely to use formal IP than service firms, and therefore include the product profile of the firms as one of their regressors.…”

“…As indicated above,Gallié and Legros (2012), in investigating firm IP protection, find that industrial firms are more likely to use formal IP than service firms, and therefore include the product profile of the firms as one of their regressors. Most papers find a strong positive effect of internal R&D on licensing-in or open innovation(Cassiman and Veugelers 2006;Hung and Tang 2008;Tsai and Chang 2008;Tsai and Wang 2007;Dohse et al 2019; Wang and Li-Ying 2014;Lichtenthaler 2008). The technological regime of the start-up is captured in our paper by our High-tech variable and the knowledge intensity of services (Low/High Knowledge IS).…”