Download This PaperThe Effect of Appropriability Rights on Continuation in Milestone-Based Collaborations: Evidence from the U.S. Television Industry
35 Pages Posted: 6 Dec 2019 Last revised: 7 Oct 2025
Date Written: July 30, 2025
Abstract
In many interfirm collaborations, projects are governed through milestone-based development, where one partner decides whether the collaboration continues beyond each milestone. These collaborations typically include provisions that allocate additional decision and financial rights between partners. Under what conditions do such appropriability rights materially shape the decision to continue a project following a milestone evaluation? Drawing on organizational economics and real options theory, I argue that appropriability rights can either increase or decrease the likelihood of continuation, depending on how they alter the benefits and risks of continuing the collaboration. Using a natural experiment created by a U.S. Federal Communications Commission ruling that stripped television networks of certain appropriability rights, I find that the removal of these rights reduced renewal rates for existing programs and changed the composition of new programs selected for development. These findings underscore the importance of strategically allocating appropriability rights in milestone-based development collaborations.
Keywords: Control Rights, Commitment, Exclusivity, Ownership, Milestones, Alliances, Portfolio, Television, FCC
JEL Classification: D22, D23, K12, L22, L24, L82, O31, O32
Suggested Citation: Suggested Citation
