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Does pre‐entry licensing undermine the performance of subsequent independent activities? Evidence from the global aerospace industry, 1944–2000
Author(s) -
Mulotte Louis,
Dussauge Pierre,
Mitchell Will
Publication year - 2013
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.2003
Subject(s) - ambiguity , overconfidence effect , industrial organization , aerospace , marketing , product (mathematics) , business , domain (mathematical analysis) , economics , computer science , law , psychology , political science , social psychology , programming language , mathematical analysis , geometry , mathematics
We study how firms' use of in‐licensing for their initial entry to a business domain can detract from the performance of their subsequent autonomous endeavors in the domain. We argue that in‐licensing produces high levels of causal ambiguity about factors that drive the performance achieved with the licensed product. In turn, the experience that firms gather through pre‐entry licensing is likely to generate superstitious learning and overconfidence that undermine the performance of licensees' subsequent independent operations. The biases will be particularly strong in the face of contextual dissimilarity. We find consistent evidence in a study of firms that entered the global aircraft industry between 1944 and 2000. The research helps advance the understanding of the benefits and costs of markets for technology. Copyright © 2012 John Wiley & Sons, Ltd.