Supply‐Side Innovation and Technology Commercialization

The majority of research and practice tends to conceptualize innovation as a vertically coupled, intra‐organizational process. We expand this perspective by conceptualizing innovation as a vertically decoupled, inter‐organizational process and by studying the role of research universities as suppliers of discoveries to this market for innovation. We combined logic from agency and real options theories to explain why the outcomes of technology commercialization are a function of licensing strategies, the autonomy of technology licensing offices (TLOs), and the incentives bestowed on scientists, research departments, and TLO officers. We rely on data from licensing surveys, interviews with 128 TLO directors, and – for convergent validity – from web‐based searches of the TLOs of American universities and the US Patent and Trademark Office. Results suggest that commercialization outcomes (in this case, revenue and start‐up creation) are enhanced when TLOs employ diverse licensing strategies, TLOs enjoy greater autonomy, universities share revenues with scientists' departments, and universities compensate TLOs officers well. Results also show that late entrants – typically underperforming universities – inflate royalty shares to scientists as a means to rectify their commercialization record. We conclude with a discussion of this study's contribution to the literature on innovation and technology commercialization.