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Appropriability and the timing of innovation: Evidence from MIT inventions

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  • Emmanuel Dechenaux
  • Brent Goldfarb
  • Scott A. Shane
  • Marie C. Thursby

Abstract

At least since Arrow (1962), the effects of appropriability on invention have been well studied, but there has been little analysis of the effect of appropriability on the commercialization of existing inventions. Exploiting a database of 805 attempts by private firms to commercialize inventions licensed from MIT between 1980 and 1996, we explore the influence of several appropriability mechanisms on the commercialization and termination of projects to develop products based on university inventions. Our central hypothesis is that the relationship between a licensee's decision to either terminate or commercialize the invention is driven by the current market value of the invention, as well as the option value of delaying its commercialization. We use a competing risks framework that allows for non- parametric heterogeneity and correlated risks. We find that better appropriability in the sense of more effective patent strength and secrecy has a strong negative effect on the hazard of license termination. The effectiveness of learning has a strong positive effect on the hazard of technology commercialization, while lead time has a negative effect.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9735.

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Date of creation: May 2003
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Handle: RePEc:nbr:nberwo:9735

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  1. Richard Jensen, 2003. "Innovative leadership: First-mover advantages in new product adoption," Economic Theory, Springer, vol. 21(1), pages 97-116, 01.
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Cited by:
  1. C. Mirjam van Praag & Peter H. Versloot, 2007. "What is the Value of Entrepreneurship? A Review of Recent Research," Tinbergen Institute Discussion Papers 07-066/3, Tinbergen Institute.
  2. Rothaermel, Frank T. & Thursby, Marie, 2005. "Incubator firm failure or graduation?: The role of university linkages," Research Policy, Elsevier, vol. 34(7), pages 1076-1090, September.
  3. Murat F. Iyigun & X. Maggie Chen, 2004. "Strategic R&D Delays Generate Market Power," Econometric Society 2004 North American Summer Meetings 213, Econometric Society.
  4. Alexander Schacht, 2012. "Commercializing inventions from public research: Does speed matter?," Jena Economic Research Papers 2012-026, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  5. Elfenbein, Daniel W., 2007. "Publications, patents, and the market for university inventions," Journal of Economic Behavior & Organization, Elsevier, vol. 63(4), pages 688-715, August.
  6. Nicola Lacetera, 2009. "Academic entrepreneurship," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(7), pages 443-464.
  7. Guido Buenstorf & Alexander Schacht, 2011. "We need to talk - or do we? Geographic distance and the commercialization of technologies from public research," Jena Economic Research Papers 2011-061, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  8. Debackere, Koenraad & Veugelers, Reinhilde, 2005. "The role of academic technology transfer organizations in improving industry science links," Research Policy, Elsevier, vol. 34(3), pages 321-342, April.

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