The Impact of Technology Licensing Payment Mechanisms on Firms' Innovative Performance

Jung Eun Lee, Younghoon Kim, Yeonbae Kim () and Donghyuk Choi
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Yeonbae Kim: Technology Management, Economics, and Policy Program (TEMEP), Seoul National University
Donghyuk Choi: Technology Management, Economics, and Policy Program (TEMEP), Seoul National University

No 201071, TEMEP Discussion Papers from Seoul National University; Technology Management, Economics, and Policy Program (TEMEP)

Abstract: Although 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.

Keywords: Technology licensing; payment mechanism; innovative performance; small-and-medium-sized enterprises. (search for similar items in EconPapers)
JEL-codes: L24 O31 C35 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cse, nep-ino, nep-ipr and nep-sbm
Date: 2010-12, Revised 2010-12
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Published later version in the journal of innovation studies of Korea Society of Innovation

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Persistent link: http://EconPapers.repec.org/RePEc:snv:dp2009:201071

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