New Article Forthcoming in R&D Management:
The influence of firm and industry characteristics on returns from technology licensing deals: Evidence from the U.S. computer and pharmaceutical sectors
* The George Washington University
This study examines the relationships between firm and industry characteristics and firms’ abnormal stock-market returns accompanying the announcement of technology licensing deals. In particular, I examine the fit between firms’ licensing activities, their resource endowments, and their industry context, and develop hypotheses on its impact on abnormal stock-market returns after licensing deals. Analysing eleven years of inward and outward licensing transactions in the U.S. computer and pharmaceutical industries between 1990 and 2000, I find support for my argument that while firms profit from both inward and outward licensing, the magnitude of such profits is determined by licensing firms’ resource endowments, and that these determinants have a different impact in different industry contexts. Understanding these relationships helps explain when firms should use licensing to exploit their proprietary technologies and make better predictions about the impact of licensing transactions on firm performance.
Keywords: Technology licensing, abnormal stock-market returns, industry comparison.