TY - JOUR AU - Dechenaux,Emmanuel AU - Goldfarb,Brent AU - Shane,Scott A. AU - Thursby,Marie C. TI - Appropriability and the timing of innovation: Evidence from MIT inventions JF - National Bureau of Economic Research Working Paper Series VL - No. 9735 PY - 2003 Y2 - May 2003 UR - http://www.nber.org/papers/w9735 L1 - http://www.nber.org/papers/w9735.pdf N1 - Author contact info: Emmanuel Dechenaux Kent State University Department of Economics Kent, OH 44242-0001 E-Mail: edechena@kent.edu Brent Goldfarb Robert H. Smith School of Business University of Maryland 4548 Van Munching Hall College Park, MD 20742 E-Mail: bgoldfarb@rhsmith.umd.edu Scott Shane Dept. of Economics Case Western Reserve University 10900 Euclid Ave. Cleveland, OH 44106 E-Mail: sas46@po.cwru.edu Marie C. Thursby College of Management Georgia Institute of Technology 800 West Peachtree Street, NW Atlanta, GA 30308-1149 Tel: 404/894-6249 Fax: 404/385-4894 E-Mail: marie.thursby@mgt.gatech.edu AB - At least since Arrow (1962), the effects of appropriability on invention have been well studied, but there has been little analysis of the effect of appropriability on the commercialization of existing inventions. Exploiting a database of 805 attempts by private firms to commercialize inventions licensed from MIT between 1980 and 1996, we explore the influence of several appropriability mechanisms on the commercialization and termination of projects to develop products based on university inventions. Our central hypothesis is that the relationship between a licensee's decision to either terminate or commercialize the invention is driven by the current market value of the invention, as well as the option value of delaying its commercialization. We use a competing risks framework that allows for non- parametric heterogeneity and correlated risks. We find that better appropriability in the sense of more effective patent strength and secrecy has a strong negative effect on the hazard of license termination. The effectiveness of learning has a strong positive effect on the hazard of technology commercialization, while lead time has a negative effect. ER -