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Appropriability and Commercialization: Evidence from MIT Inventions

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Author Info

  • Emmanuel Dechenaux

    (Kent State University)

  • Brent Goldfarb

    (University of Maryland)

  • Scott Shane

    (Case Western Reserve University)

  • Mari Thursby

    (Georgia Institute of Technology)

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. We construct a theoretical model in which the licensee faces technical and market uncertainty, and anticipates that its products will be imitated. We characterize the hazards of commercialization and termination as functions of appropriability mechanisms, including patent scope and the effectiveness of patents as well as learning, lead time, and secrecy in attaining competitive advantage. The model is tested using a competing risks framework that allows for non-parametric unobserved heterogeneity and correlated risks. In our sample, patent strength and secrecy influence termination decisions, while learning, patent scope and lead time influence commercialization decisions.

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Bibliographic Info

Paper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 05-017.

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Date of creation: Jun 2006
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Handle: RePEc:sip:dpaper:05-017

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Keywords: hazard rates; innovation; optimal stopping problem; patent scope; university licensing; termination;

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References

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Citations

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Cited by:
  1. Josh Lerner & Joacim T�g, 2013. "Institutions and venture capital," Industrial and Corporate Change, Oxford University Press, vol. 22(1), pages 153-182, February.
  2. Mueller, Elisabeth & Harhoff, Dietmar & Haeussler, Carolin, 2009. "To Be Financed or Not : The Role of Patents for Venture Capital Financing," ZEW Discussion Papers 09-003, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Bottazzi, Laura, 2009. "The role of venture capital in alleviating financial constraints of innovative firms," EIB Papers 9/2009, European Investment Bank, Economics Department.
  4. Mariagrazia Squicciarini, 2009. "Science parks: seedbeds of innovation? A duration analysis of firms’ patenting activity," Small Business Economics, Springer, vol. 32(2), pages 169-190, February.
  5. Bronwyn H. Hall, 2010. "The Financing of Innovative Firms," Review of Economics and Institutions, Università di Perugia, vol. 1(1).
  6. Elizabeth Webster & Paul H. Jensen, 2009. "Do Patents Matter for Commercialization?," Melbourne Institute Working Paper Series wp2009n08, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  7. Peng Huang & Marco Ceccagnoli & Chris Forman & D.J. Wu, 2009. "Participation in a Platform Ecosystem: Appropriability, Competition, and Access to the Installed Base," Working Papers 09-14, NET Institute, revised Sep 2009.
  8. Haeussler, Carolin & Harhoff, Dietmar & Mueller, Elisabeth, 2009. "To Be Financed or Not… - The Role of Patents for Venture Capital Financing," CEPR Discussion Papers 7115, C.E.P.R. Discussion Papers.
  9. Harhoff, Dietmar, 2009. "The role of patents and licenses in securing external finance for innovation," EIB Papers 11/2009, European Investment Bank, Economics Department.
  10. Fischer, Timo & Henkel, Joachim, 2013. "Complements and substitutes in profiting from innovation—A choice experimental approach," Research Policy, Elsevier, vol. 42(2), pages 326-339.
  11. Simon Wakeman, 2012. "How does obtaining intellectual property rights impact technology commercialization strategy for start-up innovators? Reconciling the effects on licensing vs. financing," ESMT Research Working Papers ESMT-12-03 (R1), ESMT European School of Management and Technology, revised 11 Jul 2012.
  12. Darcy, Jacques & Krämer-Eis, Helmut & Guellec, Dominique & Debande, Olivier, 2009. "Financing technology transfer," EIB Papers 10/2009, European Investment Bank, Economics Department.
  13. Nelson, Andrew J., 2012. "Putting university research in context: Assessing alternative measures of production and diffusion at Stanford," Research Policy, Elsevier, vol. 41(4), pages 678-691.

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