Trust, Incomplete Contracts and the Market for Technology

Paul Jensen, Alfons Palangkaraya and Elizabeth Webster ()

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: Conditional on the decision to enter the market for immature technology, we test for the effects that trust – as proxied by the context in which the negotiating parties met – has on the likelihood that these negotiations are successful. Using a randomised dataset of 860 university-firm and firm-firm technology transactions, we find that the depth of prior relationship and circumstantial knowledge about each other matters, and matters a lot. Parties who knew each other from a previous business are 28.2 percentage points more likely to conclude a transaction compared with cold-callers. Meeting via an industry network offers an intermediate advantage but meeting via a third party or at a conference only offers a modest advantage over cold calling.

Keywords: Markets for technology; R&D; invention; patent (search for similar items in EconPapers)
JEL-codes: O31 O34 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2013-02
New Economics Papers: this item is included in nep-ino, nep-ipr, nep-pr~ and nep-soc
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Persistent link: https://EconPapers.repec.org/RePEc:iae:iaewps:wp2013n03

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