When royalties impede technology transfer

Patrick Doran (), Russell Thomson () and Elizabeth Webster ()
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Patrick Doran: Commonwealth Government
Russell Thomson: Swinburne University of Technology

The Journal of Technology Transfer, 2025, vol. 50, issue 1, No 10, 227-244

Abstract: Abstract We use data on over 800 early-stage technology transaction negotiations to model the impact of different types of risk on whether the transaction was executed and then test for contractual factors that may ameliorate these risks. Our data highlight the importance of project risk in determining which negotiations result in a signed contract. We find that transactions aiming to sell early-stage technology to large corporates are less likely to be executed when the buyer is large, and the contract contains royalties, holding constant five different types of risk involved in the transaction. Other risk-reducing contract modes do not appear to increase the probability of an executed contract. Our results support the view that technology sellers’ reliance on royalties may reflect organisational preferences or capabilities which may not be economically or managerially optimal. We also find that ‘people risk’ matters more than ‘technological’, ‘market’, ‘appropriation’ and ‘freedom-to-operate’ risks.

Keywords: Technology transfer; Market for technology; Royalties; licensing; Business ventures; Contract design; L24; D86; 032 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10961-024-10095-5

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