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Combining Institutional and Contractual Mechanisms to Control Transactional Hazards Related to Transfers of Technology: an Empirical Analysis of Supervision Provisions in Technology Licensing Agreements


  • Eric Brousseau
  • Regis Coeurderoy


Technology licensing provides innovators with the opportunity to substantially leverage their market expansion. But licensing also exposes valuable knowledge at appropriation and more generally to opportunism since it generates ex-post mutual interdependence. The long-term performance of the transfer for the licensor thus strongly depends upon its capability to govern the relationship successfully. Designing an efficient supervision mechanism is then key to good governance of licensing contracts. In this paper we analyse in detail the scope of supervision through three dimensions: supervision on sales; supervision on product quality; and supervision on industrial and R&D facilities. We show that licensors are likely to adjust the scope of supervision in line with contractual hazards, which depend upon the scope of the transfer, the competitive stakes, and the institutional and relational environment of the transfer. Evidence is provided by a cross-section sample of 207 licensing contracts by American, Japanese and European firms.

Suggested Citation

  • Eric Brousseau & Regis Coeurderoy, 2005. "Combining Institutional and Contractual Mechanisms to Control Transactional Hazards Related to Transfers of Technology: an Empirical Analysis of Supervision Provisions in Technology Licensing Agreemen," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 12(3), pages 403-424.
  • Handle: RePEc:taf:ijecbs:v:12:y:2005:i:3:p:403-424 DOI: 10.1080/13571510500300652

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    References listed on IDEAS

    1. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    2. Alessandro Acquisti & Hal R. Varian, 2005. "Conditioning Prices on Purchase History," Marketing Science, INFORMS, vol. 24(3), pages 367-381, May.
    3. J. Yannis Bakos, 1997. "Reducing Buyer Search Costs: Implications for Electronic Marketplaces," Management Science, INFORMS, vol. 43(12), pages 1676-1692, December.
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    Cited by:

    1. Jean-Fran├žois Sattin, 2016. "Exploring the survival of patent licensing: some evidence from French foreign agreements," The Journal of Technology Transfer, Springer, vol. 41(3), pages 610-630, June.


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