Cooperative Markets for Ideas: When does Technology Licensing Combine with R&D Partnerships?

The study departs from the traditional view of licensing as a spot market transaction and investigates license integration with R&D partnerships, introducing the concept of licensing combination. Drawing on licensing and R&D partnership literature and adopting the Òtransactional valueÓ approach, we propose two types of antecedents Ð knowledge and dyad features Ð to investigate licensing combination. Using a dataset combining 441 original license agreements with firmsÕ patenting and market activity in the global biopharmaceutical industry, we find a substantial heterogeneity in the ways licensors and licensees jointly exploit markets for knowledge and the specific role of R&D collaboration and minority equity in inter-organizational exchange through licensing. Results show that licensing combination with R&D collaboration is likely when the licensed innovation is embryonic, the licensee is unfamiliar with the licensorÕs technology and partners have different technological backgrounds. Instead, licensing of highly specific knowledge is likely to be supported by minority equity participation on the part of the licensee. Finally, licensing is combined with both forms of partnership in case of competence distance between partners. In the light of the empirical results, four types of licensing combination are proposed for future research.