Appropriability and Commercialization: Evidence from MIT Inventions

Emmanuel Dechenaux, Brent Goldfarb (), Scott Shane and Marie Thursby
Additional contact information
Scott Shane: Case Western Reserve University
Marie Thursby: Georgia Institute of Technology

No 05-017, Discussion Papers from Stanford Institute for Economic Policy Research

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.

Keywords: hazard rates; innovation; optimal stopping problem; patent scope; university licensing; termination (search for similar items in EconPapers)
JEL-codes: O31 O34 (search for similar items in EconPapers)
Date: 2006-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Appropriability and Commercialization: Evidence from MIT Inventions (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:sip:dpaper:05-017

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