Determinants and Impacts of Incorporation of Local Public Technology Transfer Organizations: Evidence from Japan's Kohsetsushi

Legal reforms act as a fundamental shift in incentive systems by creating and redefining incentive tools, such as ownership, discretion, and reward. This study examines the impacts of the Local Independent Administrative Corporation Law enacted in 2003 that altered patent ownership and managerial autonomy of Kohsetsushi , which are technology transfer organizations established by local governments. Key findings of the panel data analysis are as follows. First, the local governments' decision-making regarding the incorporation was not based on the goal of improving technology transfer performance measured by licensing income. Second, incorporation encouraged Kohsetsushi to allocate their resources from diffusion/extension activities to research/inventive activities. Third, incorporation positively affected patent applications, but had no effect on licensing income. Fourth, there was a U-shaped (inverted U-shaped) relationship between licensing income of non-incorporated (incorporated) Kohsetsushi and the number of technical problems consulted with them. Fifth, counterfactual analysis showed negative ATT and positive ATU, which suggests an unintended consequence of the policy. Policy implications of the results are discussed.