Management of technology licensing as a foreign market entry mode:the case of leading Italian pharmaceutical and biotech companies

Technology licensing has been recognized for decades as one of the new market entry modes. Companies often issue licenses in foreign countries in order to enter a new market. This paper aims to unearth how companies manage the technology licensing, purposely used by firms in order to enter new markets. Starting from the perspectives given in the Dunning’s eclectic theory on foreign market entry modes, and by adopting the process view perspective from the technology management literature, and also incorporating the Dynamic Capabilities Framework, this paper tries to explain the managerial aspects of technology licensing as the foreign market entry mode. Although technology licensing as a market entry mode has been previously thoroughly explored, limited attention has been given to the possible ways companies approach in managing technology licensing for the new market entry purpose. In the paper authors rely on the multiple case study research approach in order to reveal the relevant managerial aspects implemented by Italian pharmaceutical and biotech companies that exploit technology licensing for the new market entry purpose. The key findings in this paper indicate two points: (i) companies adopt the process view perspective for managing technology licensing as the foreign market entry mode and (ii) throughout the stages of this process firms tend to develop their dynamic capabilities (sensing, seizing and reconfiguring). These research findings contribute to a deeper understanding of technology licensing as a market entry mode in the Innovation and Technology Management literature, but also in the Internationalization literature, by integrating the elements coming from these two research streams. The managerial implications resulting from this paper may be especially useful for the firms operating in the research intensive industries (like chemical, semi-conductor, biotech, etc.), enabling them to recognize the relevant issues in technology licensing process for the market entry purpose.<br

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

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

Investigating the influence of technology inflows on technology outflows in open innovation processes: a longitudinal analysis

The open innovation (OI) paradigm emphasizes the importance of integrating inbound and outbound flows of technology to increase a firm's innovation performance. While the synergies between technology inflows and outflows have been discussed in conceptual OI articles, the majority of empirical studies have typically focused on either the inward or the outward dimension of OI. According to recent reviews of OI literature, there is a need for further research that takes an integrated perspective on this topic and studies the combination of the inbound and outbound dimensions of OI. This paper follows these calls by focusing on technology licensing as the main contractual form for OI, and by investigating the relationship between technology in-licensing and out-licensing activities at the firm level of analysis. In particular, this paper argues that technology in-licensing positively influences the volume of technology out-licensing through two mechanisms. The first—resource-based—occurs because in-licensing investments expand and enrich the firm's technology base, thus increasing its value and, as a result, creating more opportunities for out-licensing. The second—capabilities-based—occurs because, due to commonalities between technology in-licensing and out-licensing in terms of performed tasks and required skills, repeated execution of in-licensing transactions contributes to the development of higher out-licensing capabilities and, as a result, increase out-licensing volume. These arguments are tested using a panel dataset of 837 Spanish manufacturing firms over the period 1998–2007. Consistent with the predictions, the empirical analysis shows that higher investments in in-licensing and more extensive in-licensing experience lead to superior volumes of technology out-licensing. These results contribute to research on OI and licensing, by empirically showing the existence of positive interactions between technology inflows and outflows and of synergies in the development of absorptive and desorptive capacities