The Licensing of Market Development Rights within Technology Alliances: A Shareholder Value Perspective

Journal of Product Innovation Management, Forthcoming

39 Pages Posted: 17 Jan 2008

See all articles by D. Eric Boyd

D. Eric Boyd

James Madison University - College of Business

Robert E. Spekman

University of Virginia - Darden School of Business

Abstract

Technology alliances create market development rights that are shared between partners in an alliance relative to co-developed product technology. Alliance partners will often manage the shared market development rights in a cooperative manner by forming an agreement in which one partner (i.e., the licensor) licenses its market development rights to the other partner in the alliance (i.e., the licensee). Research from the real options and bargaining power literatures provide opposing recommendations regarding whether a licensor creates greater shareholder value by licensing its market development rights to the licensee on a more or less restrictive basis. Empirical analysis reveals that the restrictiveness by which a firm should license its market development rights to a licensee depends upon the licensee's strategic marketing emphasis. The paper's findings add to the alliance literature by explicating the contribution of market development rights management to value creation in technology alliances. Managerially, the paper identifies an alliance partner's strategic marketing emphasis as a hitherto unrecognized factor determining when managers should follow the real options versus bargaining power literature when licensing marketing development rights within technology alliances.

Keywords: innovation, alliances, marketing strategy, shareholder value, licensing

Suggested Citation

Boyd, D. Eric and Spekman, Robert E., The Licensing of Market Development Rights within Technology Alliances: A Shareholder Value Perspective. Journal of Product Innovation Management, Forthcoming , Available at SSRN: https://ssrn.com/abstract=1084945

D. Eric Boyd (Contact Author)

James Madison University - College of Business ( email )

Harrisonburg, VA 22807
United States

Robert E. Spekman

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4860 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/spekman.htm

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