Licensing as a commercialisation strategy for new technology-based firms

A case study assessing the impact of M&A and licensing on FDA drug approvals of leading pharmaceutical companies

Despite a recent increase in FDA new drug approvals, leading pharmaceutical companies continue to face R&D productivity challenges. This highlights the need to better understand the context of their R&D concepts and related R&D outputs. Consequently, we conducted a systematic assessment of the impact of R&D expenditures, R&D intensities, mergers & acquisitions (M&A) deals and licensing agreements on new drug approvals of leading pharmaceutical companies between 2012 and 2021. Our analysis provides key insights into differentiating R&D factors: whereas R&D expenditures and the number of M&A deals correlate with the number of new drug approvals, our analysis shows no correlation with R&D intensity or the number of licensing agreements.

Developing an Open Innovation Attitude Assessment Framework for Organizations: Focusing on Open Innovation Role Perspective and Locus of Activity

From an organizational perspective, open innovation (OI) capability assessments are becoming increasingly important. The authors propose that an organization’s attitude toward interactive OI activities among OI stakeholders can reveal its degree of capability. This paper aims to focus on an organization’s OI attitude measurement scales and develop a framework linked to the role perspectives and loci of OI activities occurring at the organizational level. This research will introduce a practical, theory-based indication of OI assessment by combining a deductive process that identifies organizational OI attitude constructs with an inductive framework development process. First, the authors conducted an extensive literature review of attitude measurement on the execution of OI. Then, they performed empirical data analysis using a large-scale structured attitude assessment survey from individuals in domestic and multi-national corporations (n = 134), which led to the development of questionnaire sets on attitude evaluation. This study contributes to developing an organizational OI attitude assessment scale. Furthermore, based on empirical data analysis, the research framework demonstrated the reliability and validity of the organizational OI attitude measurement scale. Specifically, the scale contains proven questionnaires assessing OI attitudes by interrogating individual actors’ impact, behavior, and cognition regarding their organization’s OI activities. The organization’s three role perspectives (transfer, absorption, and brokerage) and two loci of activities in the OI ecosystem provide six distinct dimensions, suggesting areas of focus for a firm’s strategic OI direction.

The Value of PhDs: How the Presence of PhDs in Founding Teams Increases the Attractiveness of Startups for Corporate Investors

The creation and development of new technology-based firms (NTBFs) is at the core of national prosperity, and constitutes a key activity of the innovation policies of advanced and developing economies. Many of these companies are founded by postgraduates that hold a doctorate (PhDs). Governments foster the creation of NTBFs by PhDs to take advantage of the stock of knowledge which exists in universities and research centers. It is assumed that founders with a high level of specialization and knowledge, such as PhDs, will bring strong competitive advantages to the companies they found. The literature in this regard, however, is scarce and inconclusive. We have studied the role of PhDs in founding teams of NTBFs in a specific kind of entrepreneurial process: corporate venturing. Our conclusions suggest that companies with PhDs are significantly more attractive to corporate venture capital. Corporate venturing has a higher propensity to invest in NTBFs with PhDs in the founding teams, and these companies concentrate a higher number of corporate investors, in a kind of accumulative effect.

From Potential to Real Threat? The Impacts of Technology Attributes on Licensing Competition—Evidence from China during 2002–2013

Prior studies have extensively discussed firms’ propensity of licensing under different levels of competition. This study clarifies the differences between potential technology competition (PTC) and actual licensing competition (ALC). We investigate the relationship between these two types of competition in the context of Chinese patent licensing landscape, using patent licensing data during 2002–2013. We find that the positive effect of PTC on ALC is contingent upon the nature of licensed patent, such as generality, complexity, and newness. Our findings help scholars and managers interested in licensing to understand and monitor the likelihood of licensing competition. Policy implications are presented at the end of this study.

Entreprenurial Human Capital and Inward Technology Licensing in the Context of New Technology-Based Firms

This study investigates the rate of using ITL, specifically relating to the human capital (HC) of NTBFs: (1) Does HC of entrepreneurs have an influence on the ITL? (2) If so, then to what extent does specific HC and general HC demonstrate a different effect? Using a subset of 649 considerable NTBF’s, created from the seventh follow-up of the Kauffman Firm Survey longitudinal data, the study found that different HC within NTBFs may explain the rate of using external technologies, which answers the first question. The findings reinforce existing understandings of HTC, which concern the effect of HC on entrepreneurial activities such as opportunity search. In regards to the second research question, the found that level of general education and industry-specific startup experience are positively related to the rate of ITL. A major contribution of this study is that it presented evidence to support applicability of current insights of a specific innovation strategy, ITL, in the context of NTBFs.

Combination of Complementary Technological Knowledge to Generate “Hard to Imitate” Technologies

Valuable technological knowledge attracts more imitations. In light of knowledge-level perspective, this study investigates how firms could generate rare and valuable knowledge that is also hard to imitate. By applying specialised complementary assets concept to the technological portfolio of a firm, we show that core and background technological knowledge from internal and external sources, respectively, are complementarily combined to create new technologies that delay inter-firm knowledge externalities and that generate significant intra-firm knowledge flows simultaneously. The results suggest that the combination of knowledge in certain technological categories would have significant appropriability benefits, allowing firms to generate valuable and hard to imitate technological knowledge. This finding contributes to knowledge management, patent economics, and appropriability literature. Managerial implications for knowledge management are also discussed.

STAKEHOLDER ROLES IN BUSINESS MODEL DEVELOPMENT IN NEW TECHNOLOGY-BASED FIRMS

This paper examines the roles of external stakeholders in the business model development of new technology-based firms (NTBFs) from the perspective of the founders. Based on a longitudinal study of two Swedish NTBFs, semi-structured interviews, including timeline mapping, were conducted with the founders of each firm over a period of two years, drawing on retrospective data from the first year of founding. The findings reveal that stakeholder interaction is first initiated based on the position the stakeholder has in relation to the firm, whereas what tasks the stakeholder perform in relation to NTBF resource needs has greater consequences for the business model development. The roles of stakeholders further help shape founder perceptions of how to do business, although such influence may be limited over time. The results provide valuable insight into the influence of founders’ perceptions and firms’ business networks on the business configuration of NTBFs, revealing that business model development is both endogenous and exogenous. Specifically, the study provides some original insights around which roles stakeholders play in the early development of the business model and why these roles are necessary at certain points in time.

EFFECTS OF INTERNAL AND EXTERNAL RESOURCE DIMENSIONS ON THE BUSINESS PERFORMANCE OF NEW TECHNOLOGY-BASED FIRMS

This study examines the effects of new technology-based firms (NTBFs) internal and external resources on their early business performance. Based on a large unique dataset of 401 newly started NTBFs, we find that founders’ business experience and their firms’ proximity to other firms positively affect early business performance. Growth orientation is found to be negatively related to business performance, which might suggest a certain level of over-optimism among entrepreneurs with aspiration to grow fast.

Commercializing LanzaTech, from waste to fuel: An effectuation case

This case describes the extraordinary growth story of LanzaTech, a New Zealand (NZ)-based company cofounded in 2005 by scientists Sean Simpson and Richard Forster. LanzaTech developed a microbe which fermented the waste gases generated from steel manufacturing to produce ethanol and other chemicals. This case builds on effectuation logic and entrepreneurial discovery to highlight the challenges and opportunities of research commercialization. The case is structured chronologically and outlines the steps that the entrepreneur has taken to build the technology from scratch. It covers the early phases of the company, focussing particularly on how LanzaTech developed, refined, patented and began to commercialize its research. A key strength of the case is its multidisciplinary focus. The case describes some of the crucial aspects of research commercialization including capital raising, developing a business model, forming partnerships and expanding internationally. The case also describes a company committed to retaining its research base in NZ, and some of the opportunities and drawbacks of operating in a small economy at a distance from key market players.

The Role of Unabsorbed Slack in Internal and Collaborative Innovation Processes — A Resource-Based Framework

Extant research has highlighted the critical role of unabsorbed slack resources in internal innovation processes. In recent years, many firms have continued to open up their innovation processes to actively collaborate with external partners. In light of a limited understanding of the determinants of collaborative innovation, we provide new theoretical arguments about the relationship of unabsorbed slack resources with internal and collaborative innovation processes. Specifically, we draw on resource-based and competence-based logic and develop a conceptual framework for intraorganizational and interorganizational innovation with propositions for the impact of unabsorbed slack resources on internal and external knowledge acquisition and commercialization processes. The arguments underscore the critical role of excess resources in collaborative innovation, and they highlight the need for a fine-grained examination of the impact of unabsorbed slack resources in innovation processes. The arguments are particularly important in light of a renewed interest in essential enablers and barriers to collaborative innovation processes.

The impact of inward international licensing on absorptive capacity of SMEs

Purpose

– This study aims to examine the impacts of inward international licensing (IIL) on the absorptive capacity (ACAP) of small and medium enterprises (SMEs) in a developing economy.

Design/methodology/approach

– The study is explorative, qualitative and elaborative in nature. Therefore, a multiple case study was selected and performed as the research strategy. The data were collected from four pharmaceutical SMEs licensed from European pharmaceutical large-scale enterprises.

Findings

– The results confirm that IIL has a strong effect on acquisition, assimilation, transformation and exploitation as absorptive factors. Furthermore, the results have been enhanced by several contextual factors of ACAP human resources, inter-and intra-firm relationships, internal knowledge and managerial and strategic aspects. These contextual factors have also been influenced by IIL.

Originality/value

– From the licensee perspective in a developing context, examining the extant literature on non-equity strategic alliances shows that very few studies have empirically examined the impact of this kind of alliance, such as IIL, on SMEs’ ACAP. On this basis, the study provides evidence that non-equity strategic alliances, particularly IIL, enhance SMEs’ capabilities such as ACAP. In other words, to overcome SMEs’ resource limitations and inadequate capabilities, IIL provides opportunities for them to obtain capabilities and critical resources.

OUT-LICENSING IN MARKETS WITH ASYMMETRIC INFORMATION: THE CASE OF THE PHARMACEUTICAL INDUSTRY

Few large pharmaceutical companies have recently discovered out-licensing of terminated R&D results as a way to recoup some of the significant investments made in R&D and to improve R&D productivity. Our empirical investigation reveals that the licensing partners are preferably young, small and highly specialized companies. This reverses the traditional logic of out-licensing. While out-licensing is usually done because of downstream concerns, our analysis shows that the company which owns the necessary assets for further development (the large pharmaceutical company) sells the license to a firm (the small partner company) which has — at the time of deal closure — no track record to prove its ability to successfully develop the compound.

As the lack of a track record does not allow the pharmaceutical company to distinguish between the partner firms based on their development capabilities, these out-licensing deals are characterized by an asymmetric distribution of information. The application of the theory of adverse selection allows deriving managerial recommendations along three dimensions of the out-licensing deal: product coverage, price setting and performance presumption. By making changes along these dimensions, R&D managers are able to reduce the information asymmetry and approximate an equilibrium in the out-licensing market.

THE ROLE OF COMPLEMENTARY ACTORS IN THE DEVELOPMENT OF INNOVATION IN SMALL FIRMS

This study examines the findings of a survey of small, high innovator firms and their assessment of the risks and benefits of forming strategic alliances with third party "complementors". The study found that the entrepreneurs of these small innovator firms were willing to form strategic alliances where such collaboration would assist in reducing customer perceptions of risk in the adoption of their innovation, while also enhancing the customer's understanding of the innovation. However, the entrepreneur of the small firm also needed to be confident that the alliance would allow him or her to retain control over the quality of the final outcome to their customer. These findings suggest that education of the entrepreneur in the development and management of strategic networks may be a useful enhancement to the process of innovation in small firms.