Technology acquisition through licensing. Implications for firm strategy
Creators: name: Leone, Maria Isabella <1982>
Publisher: name: Alma Mater Studiorum - Università di Bologna
Year: 2008
Subjects: SECS-P/08 Economia e gestione delle imprese

description: Nowadays licensing practices have increased in importance and relevance driving the
widespread diffusion of markets for technologies. Firms are shifting from a tactical to a strategic
attitude towards licensing, addressing both business and corporate level objectives. The Open
Innovation Paradigm has been embraced. Firms rely more and more on collaboration and
external sourcing of knowledge. This new model of innovation requires firms to leverage on
external technologies to unlock the potential of firms’ internal innovative efforts. In this context,
firms’ competitive advantage depends both on their ability to recognize available opportunities
inside and outside their boundaries and on their readiness to exploit them in order to fuel their
innovation process dynamically. Licensing is one of the ways available to firm to ripe the
advantages associated to an open attitude in technology strategy. From the licensee’s point view
this implies challenging the so-called not-invented-here syndrome, affecting the more traditional firms
that emphasize the myth of internal research and development supremacy. This also entails
understanding the so-called cognitive constraints affecting the perfect functioning of markets for
technologies that are associated to the costs for the assimilation, integration and exploitation of
external knowledge by recipient firms.
My thesis aimed at shedding light on new interesting issues associated to in-licensing
activities that have been neglected by the literature on licensing and markets for technologies. The
reason for this gap is associated to the “perspective bias” affecting the works within this stream
of research. With very few notable exceptions, they have been generally concerned with the
investigation of the so-called licensing dilemma of the licensor – whether to license out or to
internally exploit the in-house developed technologies, while neglecting the licensee’s perspective.
In my opinion, this has left rooms for improving the understanding of the determinants and
conditions affecting licensing-in practices. From the licensee’s viewpoint, the licensing strategy
deals with the search, integration, assimilation, exploitation of external technologies. As such it
lies at the very hearth of firm’s technology strategy. Improving our understanding of this strategy
is thus required to assess the full implications of in-licensing decisions as they shape firms’
innovation patterns and technological capabilities evolution. It also allow for understanding the
so-called cognitive constraints associated to the not-invented-here syndrome. In recognition of that, the
aim of my work is to contribute to the theoretical and empirical literature explaining the determinants of the licensee’s behavior, by providing a comprehensive theoretical framework as
well as ad-hoc conceptual tools to understand and overcome frictions and to ease the
achievement of satisfactory technology transfer agreements in the marketplace.
Aiming at this, I investigate licensing-in in three different fashions developed in three
research papers. In the first work, I investigate the links between licensing and the patterns of
firms’ technological search diversification according to the framework of references of the Search
literature, Resource-based Theory and the theory of general purpose technologies. In the second
paper - that continues where the first one left off – I analyze the new concept of learning-bylicensing,
in terms of development of new knowledge inside the licensee firms (e.g. new patents)
some years after the acquisition of the license, according to the Dynamic Capabilities perspective.
Finally, in the third study, Ideal with the determinants of the remuneration structure of patent
licenses (form and amount), and in particular on the role of the upfront fee from the licensee’s
perspective. Aiming at this, I combine the insights of two theoretical approaches: agency and real
options theory.