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When does selling make you wiser? Impact of licensing on Chinese firms’ patenting propensity

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Abstract

With the rising trend of open innovation, firms routinely engage in licensing out their technologies. However, little research has examined how licensing-out impacts a firm’s subsequent ability to innovate. We argue that firms develop superior intellectual property management capabilities as a function of their licensing-out activities. We further argue that firms that participate in technology market through both licensing-in as well as licensing-out develop superior licensing and knowledge assimilation capabilities, which help them improve their patenting performance. We test our hypotheses using a longitudinal survey data of Chinese firms and find broad support of our hypotheses. We further discuss the implications of our theory and managerial practice.

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Notes

  1. While in prior literature licensing-out is defined strictly by the technology transfer agreement in which a licensee is granted the right to use a licensor’s technology for a specific period, in particular geographic regions, and with clear fee structure, we took a broader definition of licensing-out throughout the paper by including various types of technology transfer such as formal licensing, contract R&D, and R&D consulting and services (Arora and Ceccagnoli 2006). Stankiewicz (1994) also identifies three modes by which new firms exploit their technological capabilities: the consulting and R&D contracting mode, the licensing mode, and the product-oriented mode, i.e. marketing and sale of products.

  2. We thank an anonymous reviewer for guiding us toward this literature stream.

  3. http://www.most.gov.cn/gxjscykfq/gxjsgxqml/.

  4. https://www.bcgperspectives.com/content/articles/growth_innovation_the_most_innovative_companies_2012/.

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Authors and Affiliations

  1. School of Business and Economics, Michigan Technological University, 1400 Townsend Drive, Houghton, MI, 49931-1295, USA

    Manish K. Srivastava

  2. School of Business and Economics, Michigan Technological University, 1400 Townsend Drive, Houghton, MI, 49931-1295, USA

    Tang Wang

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  1. Manish K. Srivastava
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  2. Tang Wang
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Correspondence to Tang Wang.

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Manish K. Srivastava and Tang Wang have contributed equally to this article.

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Table 4 Endogeneity correction
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Srivastava, M.K., Wang, T. When does selling make you wiser? Impact of licensing on Chinese firms’ patenting propensity. J Technol Transf 40, 602–628 (2015). https://doi.org/10.1007/s10961-014-9354-y

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