Date of this Version
Cornhusker Economics (January 25, 2023)
Agricultural Economics, University of Nebraska-Lincoln
What factors influence a firm's decision to share its technology with competitors? While patent licensing has received considerable attention in the literature, studies have typically focused on the optimal licensing contract for product and process innovations in various market settings. A key finding of this literature is that the optimal licensing strategy depends on the type of the patentee; that is, whether the patentee is a producer in the market (insider patentee) or not (outsider patentee). Little attention has been given, however, to the role the general public can play on firms' incentives to share their innovations through licensing contracts and on the type of contracts that will be chosen. Research shows that the public is concerned about societal and environmental issues and expects firms to play an active role in addressing them, even when they are not relevant to the firm's business practices (Falck and Heblich, 2007; Cone Communications, 2017). Stakeholders pressure firms to engage in innovation that align with their social and environmental interests that goes beyond firms' business practices (Frooman, 1999). Moreover, an interesting externality is associated with new technologies that address complex environmental and societal issues.
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