The Impact of Technology Licensing Payment Mechanisms on Firms' Innovative Performance
AbstractAlthough numerous papers have examined the ways in which firms can improve their innovative performance through technology alliances, empirical research on the effect of contract structures in technology licensing has been scarce. This study provides evidence that the payment mechanisms agreed upon in licensing contracts affect the licensee firms¡¯ innovative performance. Based on a dataset of technology licensing contracts concluded by small- and medium-sized enterprises around the world, this paper analyzes the influence of fixed-fee payments and ongoing payments?including royalty, milestone, and equity payments?on firm performance. The findings reveal that ongoing payments are more likely to positively influence the innovative performance of licensee firms. The results also suggest that equity grants to the licensor would not impact the licensee¡¯s performance as much as fixed-fee payments. These outcomes provide crucial insights into the ways in which small high-tech firms can utilize their external technology resources.
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Bibliographic InfoPaper provided by Seoul National University; Technology Management, Economics, and Policy Program (TEMEP) in its series TEMEP Discussion Papers with number 201071.
Length: 21 pages
Date of creation: Dec 2010
Date of revision: Dec 2010
Publication status: Published later version in the journal of innovation studies of Korea Society of Innovation
Technology licensing; payment mechanism; innovative performance; small-and-medium-sized enterprises.;
Find related papers by JEL classification:
- L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-01-16 (All new papers)
- NEP-CSE-2011-01-16 (Economics of Strategic Management)
- NEP-INO-2011-01-16 (Innovation)
- NEP-IPR-2011-01-16 (Intellectual Property Rights)
- NEP-SBM-2011-01-16 (Small Business Management)
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