Open AccessAn innovation adoption model of licensing-in for US start-ups
Author(s) -
Bernadette Power,
Gavin Reid
Publication year - 2021
Publication title -
economics and business letters
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.197
H-Index - 4
ISSN - 2254-4380
DOI - 10.17811/ebl.10.4.2021.369-382
Subject(s) - licensee , endogeneity , business , upstream (networking) , probit model , intellectual property , industrial organization , downstream (manufacturing) , equity (law) , sample (material) , probit , product (mathematics) , marketing , microeconomics , economics , license , econometrics , computer network , chemistry , geometry , mathematics , chromatography , political science , computer science , law , operating system
Using the Kauffman panel dataset of US start-ups, we analyse the key determinants oflicensing-in adoption. Licensing-in entails an intellectual property contract between the licensor(e.g. upstream established firm) and licensee (e.g. downstream start-up) aiming to bring aninnovation to market rapidly. Assuming maximizing of the owner’s managerial utility in thestart-up years, we explain licensing-in adoption through firm characteristics like size, R&D andcapital structure, as well as other IP types, and controls for year and regional fixed effects, usingpanel probit estimation with adjustments for sample selection bias and endogeneity. We findkey determinants of licensing-in to be owners’ equity, product (rather than service) sales andR&D spend; and then comment on their policy implications for business incubation.