The Governance of Intellectual Property Rights in Knowledge Transfers: An Empirical Analysis of Supervision Provisions in Technology Licensing Agreements

Authors: Brousseau, Eric¹; Coeurderoy, Régis²

Source: International Journal of the Economics of Business, Volume 12, Number 3, Number 3/November 2005 , pp. 403-424(22)

Publisher: Routledge, part of the Taylor & Francis Group

Abstract:

Technology licensing provides innovators with the opportunity to substantially leverage their market expansion. But licensing also exposes valuable knowledge at appropriation and more generally to opportunism since it generates ex-post mutual interdependence. The long-term performance of the transfer for the licensor thus strongly depends upon its capability to govern the relationship successfully. Designing an efficient supervision mechanism is then key to good governance of licensing contracts. In this paper we analyse in detail the scope of supervision through three dimensions: supervision on sales; supervision on product quality; and supervision on industrial and R&D facilities. We show that licensors are likely to adjust the scope of supervision in line with contractual hazards, which depend upon the scope of the transfer, the competitive stakes, and the institutional and relational environment of the transfer. Evidence is provided by a cross-section sample of 207 licensing contracts by American, Japanese and European firms.

Keywords: Technology Licensing Agreements; Knowledge Transfers; Intellectual Property Rights; Supervision Clauses

Document Type: Research article

DOI: http://dx.doi.org/10.1080/13571510500300652

Affiliations: 1: EconomiX, Université de Paris X, Bâtiment K, 200 Avenue de la République, F‐92001 Nanterre Cedex, France, +33 (0)1 40 97 59 22, +33 (0)1 40 97 59 07 2: CRECIS, School of Management, Université Catholique de Louvain, Place des Doyens, 1, B‐1348 Louvain La Neuve, Belgium, +32.10.47.84.24, +32.10.47.83.24

Publication date: 2005-11-01

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