Licensing Speed: Its Determinants and Payoffs

Journal of Engineering and Technology Management, 2017

44 Pages Posted: 9 Nov 2017

See all articles by Karen Elizabeth Ruckman

Karen Elizabeth Ruckman

Simon Fraser University (SFU) - Beedie School of Business

Ian P. McCarthy

Simon Fraser University (SFU) - Beedie School of Business

Date Written: November 7, 2017

Abstract

There has been much research interest in the speed of innovation, although few consistent findings have emerged. In this study, we unpack the innovation process and focus on the commercialization stage to examine two questions: Which licensor and patent characteristics determine the speed of licensing? How does the speed of licensing impact the royalties and lump-sum payments to licensors? We addressed these questions by proposing that licensing speed is influenced by variables for licensor prominence (size and experience), licensor knowledge structuration (technological depth, technological breadth and experience), and patent appeal (forward citations, scope and complexity). We predict and find that these variables work to increase the size, complexity and duration of the licensing-out task, while also allowing licensors to take their time to review, negotiate and select agreements with higher royalty rates. These findings are counter to arguments for a fast-paced innovation strategy, as it suggests that for the commercialization stage of the innovation process the relationship between licensing speed and licensor royalty rates rewards a ‘less haste, greater payoff approach.

Keywords: Licensing, biopharmaceutical, patents, licensing speed, royalty rates, innovation, licensors, licensees, prestige, prominence

JEL Classification: M

Suggested Citation

Ruckman, Karen Elizabeth and McCarthy, Ian P., Licensing Speed: Its Determinants and Payoffs (November 7, 2017). Journal of Engineering and Technology Management, 2017. Available at SSRN: https://ssrn.com/abstract=3066935

Karen Elizabeth Ruckman

Simon Fraser University (SFU) - Beedie School of Business ( email )

8888 University Drive
Burnaby, British Colombia V5A 1S6
Canada

Ian P. McCarthy (Contact Author)

Simon Fraser University (SFU) - Beedie School of Business ( email )

8888 University Drive
Burnaby, British Columbia V5A 1S6
Canada

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