Sourcing Technological Knowledge Through Foreign Inward Licensing to Boost the Performance of Indian Firms: The Contingent Effects of Internal R&D and Business Group Affiliation

Stefano Elia, Surender Munjal () and Vittoria G. Scalera
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Stefano Elia: Politecnico di Milano
Surender Munjal: University of Leeds
Vittoria G. Scalera: University of Amsterdam

Management International Review, 2020, vol. 60, issue 5, No 2, 695-721

Abstract: Abstract Sourcing technological knowledge from abroad is becoming a popular strategy among emerging market firms (EMFs). Combining the Knowledge-Based View and the Resource Dependence Theory, we argue that augmenting technological knowledge through foreign licensing enables EMFs to access state-of-the-art technological knowledge, reduce operational costs and risks associated to the innovation process, and develop a knowledge-based competitive advantage, ultimately boosting their financial performance. Using data about Indian firms observed from 2001 to 2013, we find that firms with a higher share of foreign inward technology licenses report better financial performance. However, the positive impact of technological knowledge accessed through inward licensing on firm performance is contingent upon: (1) the internal knowledge developed through R&D activity, and (2) the affiliation with business groups. While Indian firms with higher level of internal R&D are able to better leverage the value of foreign technological knowledge, thus reaching higher performance, firms affiliated to business groups gain fewer benefits from licensed foreign technological knowledge than non-business-group affiliated firms.

Keywords: Emerging market firms; Foreign inward technology licensing; Financial performance; Business group; Knowledge-based view; Resource dependence theory (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (17)

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DOI: 10.1007/s11575-020-00419-6

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