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Does pre-entry licensing undermine the performance of subsequent independent activities? Evidence from the global aerospace industry, 1944-2000

Author

Listed:
  • Pierre Dussauge

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • Louis Mulotte
  • Will Mitchell

Abstract

We study how firms' use of in-licensing for their initial entry to a business domain can detract from the performance of their subsequent autonomous endeavors in the domain. We argue that in-licensing produces high levels of causal ambiguity about factors that drive the performance achieved with the licensed product. In turn, the experience that firms gather through pre-entry licensing is likely to generate superstitious learning and overconfidence that undermine the performance of licensees' subsequent independent operations. The biases will be particularly strong in the face of contextual dissimilarity. We find consistent evidence in a study of firms that entered the global aircraft industry between 1944 and 2000. The research helps advance the understanding of the benefits and costs of markets for technology.

Suggested Citation

  • Pierre Dussauge & Louis Mulotte & Will Mitchell, 2013. "Does pre-entry licensing undermine the performance of subsequent independent activities? Evidence from the global aerospace industry, 1944-2000," Post-Print hal-00781507, HAL.
    • Handle: RePEc:hal:journl:hal-00781507
    DOI: 10.1002/smj.2003
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    Citations

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    Cited by:

    1. Nilanjana Dutt & Will Mitchell, 2020. "Searching for knowledge in response to proximate and remote problem sources: Evidence from the U.S. renewable electricity industry," Strategic Management Journal, Wiley Blackwell, vol. 41(8), pages 1412-1449, August.
    2. Castellaneta, Francesco & Conti, Raffaele, 2017. "How does acquisition experience create value? Evidence from a regulatory change affecting the information environment," European Management Journal, Elsevier, vol. 35(1), pages 60-68.
    3. Solon Moreira & Thomas Maximilian Klueter & Stefano Tasselli, 2020. "Competition, Technology Licensing-in, and Innovation," Organization Science, INFORMS, vol. 31(4), pages 1012-1036, July.
    4. Zhang, Dongyang & Guo, Rui & He, Xiaodan, 2022. "How does the exclusive license stimulate firm’s subsequent innovation? The role of innovation financial input," Research in International Business and Finance, Elsevier, vol. 60(C).
    5. Cabaleiro-Cerviño, Goretti & Burcharth, Ana, 2020. "Licensing agreements as signals of innovation: When do they impact market value?," Technovation, Elsevier, vol. 98(C).
    6. Maria Isabella Leone & Raffaele Oriani & Toke Reichstein, 2015. "How much are flexibility and uncertainty worth in patent licensing?," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(4), pages 371-394, December.
    7. Klueter, Thomas & Monteiro, L. Felipe & Dunlap, Denise R., 2017. "Standard vs. partnership-embedded licensing: Attention and the relationship between licensing and product innovations," Research Policy, Elsevier, vol. 46(9), pages 1629-1643.
    8. Meschnig, Annika & Dubiel, Anna, 2023. "From formation to performance outcomes: A review and agenda for licensing research," Journal of Business Research, Elsevier, vol. 167(C).
    9. Li, Zhengyu, 2016. "Essays on knowledge sourcing and technological capability : A knowledge structure perspective," Other publications TiSEM b8ff31fc-c57b-4bc3-b5a4-0, Tilburg University, School of Economics and Management.

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