Robert H. Smith School of Business
University of Maryland
4548 Van Munching Hall
College Park, MD 20742
NBER Working Papers and Publications
|May 2003||Appropriability and the timing of innovation: Evidence from MIT inventions|
with Emmanuel Dechenaux, Scott A. Shane, Marie C. Thursby: w9735
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...