NATIONAL BUREAU OF ECONOMIC RESEARCH
NBER Working Papers and Publications
|July 2012||Managing Licensing in a Market for Technology|
with Ashish Arora, Thomas Roende: w18203
Over the last decade, companies have paid greater attention to the management of their intellectual assets. We build a model that helps understand how licensing activity should be organized within large corporations. More specifically, we compare decentralization--where the business unit using the technology makes licensing decisions--to centralized licensing. The business unit has superior information about licensing opportunities but may not have the appropriate incentives because its rewards depend upon product market performance. If licensing is decentralized, the business unit forgoes valuable licensing opportunities since the rewards for licensing are (optimally) weaker than those for product market profits. This distortion is stronger when production-based incentives are more powerf...
Published: “Managing licensing in a market for technology” (with Andrea Fosfuri and Thomas Roende). May 2013. Management Science. 59(5):1092-1106. citation courtesy of