Hazards in Transfering Knowledge and Contractual Architecture: The Case of Payment Schemes in Technology Licensing Agreements

Numéro: 2010-5

Hazards in Transfering Knowledge and Contractual Architecture: The Case of Payment Schemes in Technology Licensing Agreements

Christian Bessy (IDHE, CNRS), Eric Brousseau (Economix, Université Paris X) & Stéphane Saussier (IAE Paris)

Abstract: This article provides an empirical assessment of payment schemes implemented in technology licensing agreements. Following a new institutional and resource-based view analysis, we argue that transaction costs evolve with the quality of the protection provided to the licensor by the institutional environment, the nature of the resources exchanged, and the characteristics of partners.

We develop propositions and test them using an original source of data (a French governmental database recording international technology transfers). While we observe no clear effect of the institutional environment on the design of payment schemes, our empirical investigations highlight the key role played by the tacit nature of the licensed knowledge. Our results suggest that precise data measuring what is exchanged might shed new light on previous studies focusing only on sector differences. Furthermore, our results also show that ex-post contractual hazards appear to be particularly acute in the case of technology transfers, which explains why the results of previous studies on other classes of transaction are not confirmed. This suggests that different payment scheme strategies should be retained depending on what is actually exchanged by contracting parties.

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