Organizing for external technology exploitation in diversified firms

Besides applying technology in their own products, industrial firms increasingly exploit their technologies externally, for example through out-licensing. Earlier studies cannot explain the discrepancies between a few pioneering firms in active technology licensing and the managerial difficulties of many others. In diversified firms, diverging interests of the corporate and business unit level in the keep-or-sell decision constitute a central barrier to active licensing. Therefore, this article examines two essential dimensions of designing the corporate/business unit interface in diversified firms: the centralization of the activities on the corporate level and the alignment between the organizational levels. The study tests three hypotheses regarding the interaction and consequences of these organizational dimensions with data from 152 firms. Consistent with the hypotheses, the data provide support for the benefits from medium levels of corporate centralization and corporate/business unit alignment. The results have implications for technology exploitation, open innovation, markets for technology, and corporate strategy.